The Dillon Corporation makes and sells a single product. Overhead costs are applied on the basis of standard direct labor-hours. The standard cost card shows that 5 direct labor-hours are required per unit. The Dillon Corporation had the following budgeted and actual data for March:

-The variable overhead rate variance for March is:
A)$4,900 U
B)$11,060 U
C)$14,700 U
D)$17,300 U

Question

The Dillon Corporation makes and sells a single product. Overhead costs are applied on the basis of standard direct labor-hours. The standard cost card shows that 5 direct labor-hours are required per unit. The Dillon Corporation had the following budgeted and actual data for March:

-The variable overhead rate variance for March is:

-The variable overhead rate variance for March is:
A)$4,900 U 
B)$11,060 U 
C)$14,700 U 
D)$17,300 U

Quizplus · Accepted Answer

The variable overhead rate variance is calculated as the difference between the actual variable overhead costs incurred and the standard variable overhead costs based on actual hours worked. The given choice B, $11,060 U (unfavorable), represents this variance.

The Dillon Corporation Makes and Sells a Single Product