A manufacturing company uses a standard costing system in which standard machine-hours (MHs)is the measure of activity.Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period: The variable overhead rate variance for the period was closest to:
A)$315 U
B)$1,465 F
C)$1,465 U
D)$315 F

Question

A manufacturing company uses a standard costing system in which standard machine-hours (MHs)is the measure of activity.Data from the company's flexible budget for manufacturing overhead are given below:  The following data pertain to operations for the most recent period:  The variable overhead rate variance for the period was closest to:
A)$315 U 
B)$1,465 F 
C)$1,465 U 
D)$315 F

Quizplus · Accepted Answer

SR = $35,075 ÷ 6,100 MHs = $5.75 per MH
AH × AR = $36,540
Labor rate variance = (AH × AR)- (AH × SR)
= $36,540 - (6,300 MHs × $5.75 per MH)
= $36,540 - $36,225
= $315 U

A Manufacturing Company Uses a Standard Costing System in Which