The Dillon Corporation makes and sells a single product.Overhead costs are applied on the basis of standard direct labor-hours.The standard cost card shows that 5 direct labor-hours are required per unit.The Dillon Corporation had the following budgeted and actual data for March: The variable overhead rate variance for March is:
A)$4,900 U
B)$11,060 U
C)$14,700 U
D)$17,300 U

Question

The Dillon Corporation makes and sells a single product.Overhead costs are applied on the basis of standard direct labor-hours.The standard cost card shows that 5 direct labor-hours are required per unit.The Dillon Corporation had the following budgeted and actual data for March:  The variable overhead rate variance for March is:
A)$4,900 U 
B)$11,060 U 
C)$14,700 U 
D)$17,300 U

Quizplus · Accepted Answer

AH × AR = $140,500
SR = $123,200 ÷ 154,000 hours = $0.80 per hour
Variable overhead rate variance = (AH × AR)- (AH × SR)
= ($140,500)- (161,800 hours × $0.80 per hour)
= $140,500 - $129,440
= $11,060 U

The Dillon Corporation Makes and Sells a Single Product