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:
-What was the variable overhead rate variance for the period to the nearest dollar?
A)$1,750 U
B)$820 F
C)$1,750 F
D)$820 U

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: 
-What was the variable overhead rate variance for the period to the nearest dollar?
A)$1,750 U 
B)$820 F 
C)$1,750 F 
D)$820 U

Quizplus · Accepted Answer

SR = $31,620 F1F1F1S1F1F1F10 6,800 MHs = $4.65 per MH
Variable overhead rate variance = AH(AR - SR)
= $30,800 - (7,000 MHs F1F1F1S1F1F1F10 $4.65 per MH)
= $30,800 - $32,550 = $1,750 F

A Manufacturing Company Uses a Standard Costing System in Which