Cuda Manufacturing Corporation uses a standard cost system with machine-hours (MHs)as the activity base for overhead.The following information relates to Cuda's operations last year: What was Cuda's variable overhead rate variance?
A)$6,000 Unfavorable
B)$15,000 Favorable
C)$20,000 Unfavorable
D)$21,000 Favorable

Question

Cuda Manufacturing Corporation uses a standard cost system with machine-hours (MHs)as the activity base for overhead.The following information relates to Cuda's operations last year:  What was Cuda's variable overhead rate variance?
A)$6,000 Unfavorable 
B)$15,000 Favorable 
C)$20,000 Unfavorable 
D)$21,000 Favorable

Quizplus · Accepted Answer

AH × AR = $370,000
Variable overhead rate variance = (AH × AR)- (AH × SR)
= ($370,000)- (52,000 MHs × $7 per MH)
= $370,000 - $364,000
= $6,000 U

Cuda Manufacturing Corporation Uses a Standard Cost System with Machine-Hours