Wisteria Co. produces snowboards and uses a standard cost system. Variable overh

Question

Wisteria Co. produces snowboards and uses a standard cost system. Variable overhead is applied using direct labor hours. Standards allowed for each unit are 5.3 hours of labor at a standard variable overhead rate of $7.30. During December, Wisteria Co. produced 3,050 snowboards. Materials purchases totaled 21,600 pounds at a total cost of $224,780. Materials usage totaled 21,010 pounds. Payroll totaled $183,690 for 17,100 hours worked. Variable overhead incurred totaled $121,760.

Wisteria Co. produces snowboards and uses a standard cost system. Variable overhead is applied using direct labor hours. Standards allowed for each unit are 5.3 hours of labor at a standard variable overhead rate of $7.30. During December, Wisteria Co. produced 3,050 snowboards. Materials purchases totaled 21,600 pounds at a total cost of $224,780. Materials usage totaled 21,010 pounds. Payroll totaled $183,690 for 17,100 hours worked. Variable overhead incurred totaled $121,760 a. Calculate the variable overhead rate variance. (Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).) te Variance b. Calculate the variable overhead efficiency variance. (Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).) Efficiency Variance

Explanation / Answer

a Rate variance = 121760-(17100*7.3)= $3070 favorable b Efficiency variance = 7.3*(17100-3050*5.3)= $6825.5 Unfavorable

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