Coblentz Fabrication Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs) at $6.20 per MH. The company had budgeted its fixed manufacturing overhead cost at $40,000 for the month. During the month, the actual total variable manufacturing overhead was $48,970 and the actual total fixed manufacturing overhead was $43,000. The actual level of activity for the period was 8,300 MHs. What was the total of the variable overhead rate and fixed manufacturing overhead budget variances for the month?
A)$2,490 Favorable
B)$510 Favorable
C)$510 Unfavorable
D)$2,490 Unfavorable

Question

Quizplus · Accepted Answer

Variable overhead rate variance = Actual variable overhead - (Standard variable overhead rate x Actual activity)
= $48,970 - ($6.20 x 8,300) = $510 unfavorable

Fixed overhead budget variance = Actual fixed overhead - Budgeted fixed overhead
= $43,000 - $40,000 = $3,000 unfavorable

Total overhead variance = Variable overhead rate variance + Fixed overhead budget variance
= $510 unfavorable + $3,000 unfavorable
= $3,510 unfavorable

Therefore, the correct choice is C, $510 unfavorable.

Coblentz Fabrication Corporation Has a Standard Cost System in Which