Problem 4 (10 points) The following variable manufacturing standards have been e

Question

Problem 4 (10 points) The following variable manufacturing standards have been established for s partilar Standard hours per unit of output Standard variable overhead rate 06 517 sper hour The following data pertains to operations for last month Actual hours Actual total variable overhead cost Actual output 6,200 hours 110,810 10,200 units Required: the variable overhead rate variance for the month? Favorable or unfavorable? SHOW YOUR WORK. (5 points) What is the variable overhead spending variance for the month? Favorable or unfavorable? SHOW YOUR WORK. (5 points) b) AQ x SP SQ xSP AOX AP Rate Variance Efficiency Variance Spending Variance

Explanation / Answer

a. Variable overhead rate variance = Actual hours * Actual rate -   Actual hours * standard rate

= 110670 - (6200 * $17.55)

= 110670 - 108810

= 1860 Unfavorable

b. Variable overhead efficiency variance = Standard rate * (Acutal hours - standard hours)

= $17.55 * (6200 - [0.6 * 10200])

= $17.55 * (6200 - 6120)

= $1404 Unfavorable

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