Dolney Corporation has provided the following data for a recent period:
-The variable overhead rate variance for lubricants is closest to:
A) $3,820 U
B) $600 F
C) $3,820 F
D) $4,420 F

Question

Dolney Corporation has provided the following data for a recent period: 
-The variable overhead rate variance for lubricants is closest to:
A) $3,820 U 
B) $600 F 
C) $3,820 F 
D) $4,420 F

Quizplus · Accepted Answer

The formula for variable overhead rate variance is (Actual Variable Overhead Rate - Budgeted Variable Overhead Rate) x Actual Quantity of the Cost Driver.

Based on the data provided, the actual variable overhead rate for lubricants is (43,000 / 1,000) = $43 per machine hour.

The budgeted variable overhead rate is (32,000 / 800) = $40 per machine hour.

The actual quantity of the cost driver is 800 machine hours.

So, the variable overhead rate variance for lubricants is:

($43 - $40) x 800 = $2,400 F

Therefore, the closest answer is C) $3,820 F.

Dolney Corporation Has Provided the Following Data for a Recent