Austin Brands Company uses standard costs for its manufacturing division. Standa

Question

Austin Brands Company uses standard costs for its manufacturing division. Standards specify 0.2 direct labor hours per unit of product. At the beginning of the year, the static budget for variable overhead costs included the following data: Production volume 6,200 units Budgeted variable overhead costs $15,000 Budgeted direct labor hours 640 hours At the end of the year, actual data were as follows: Production volume 4,100 units Actual variable overhead costs $15,000 Actual direct labor hours 480 hours What is the variable overhead cost variance? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

A. $ $3,749 U

B. $ $4,998 F

C. $15,000 U

D. $15,000 F

Explanation / Answer

Actual overhead cost $     15,000 Actual hours             480 Per hour actual cost $       31.25 Standard Overhead cost $     15,000 Standard hours             640 Per hour budgeted cost $       23.44 Variable overhead cost variance = Actual hours x ( Actual cost per hour - Standard cost per hour) 480 x (31.25 - 23.44) $       3,749 U

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