Pohl Corporation uses a standard cost system in which manufacturing overhead is applied on the basis of standard machine-hours.For June,the company's manufacturing overhead flexible budget showed the following total budgeted costs at a denominator activity level of 20,000 machine-hours: During June,17,000 machine-hours were used to complete 13,000 units of product,and the following actual total overhead costs were incurred: At standard,each unit of finished product requires 1.4 hours of machine time. The variable overhead rate variance for maintenance cost for June was:
A)$1,020 F
B)$1,020 U
C)$3,230 F
D)$3,230 U

Question

Pohl Corporation uses a standard cost system in which manufacturing overhead is applied on the basis of standard machine-hours.For June,the company's manufacturing overhead flexible budget showed the following total budgeted costs at a denominator activity level of 20,000 machine-hours:  During June,17,000 machine-hours were used to complete 13,000 units of product,and the following actual total overhead costs were incurred:  At standard,each unit of finished product requires 1.4 hours of machine time. The variable overhead rate variance for maintenance cost for June was:
A)$1,020 F 
B)$1,020 U 
C)$3,230 F 
D)$3,230 U

Quizplus · Accepted Answer

SR = $16,000 ÷ 20,000 machine-hours = $0.80 per machine-hour
Variable overhead rate variance = (AH × AR)- (AH × SR)
= $14,620 - (17,000 machine-hours × $0.80 per machine-hour)
= $14,620 - $13,600
= $1,020 U

Pohl Corporation Uses a Standard Cost System in Which Manufacturing