The Waters Company has a standard costing system. Variable manufacturing overhea

Question

The Waters Company has a standard costing system. Variable manufacturing overhead is assigned to production on the basis of machine hours.

The following data are available for July:


·Actual variable manufacturing overhead cost incurred: $45,240


·Actual machine hours worked: 3,200


·Variable overhead spending variance: $6,840 unfavorable


·Total variable overhead variance: $9,240 unfavorable


The standard number of machine hours allowed for July production is:
1) 3,200 hours.
2) 3,000 hours.
3) 3,400 hours.
4) 4,540 hours.

Explanation / Answer

The standard number of machine hours allowed for July production is: 2) 3,000 hours.

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