Manufacturing overhead was estimated to be $412,000 for the year along with 20,6

Question

Manufacturing overhead was estimated to be $412,000 for the year along with 20,600 direct labor hours. Actual manufacturing overhead was $415,100, and actual labor hours were 21,100. To dispose of the balance in the Manufacturing Overhead account, which of the following would be correct?

Jupiter Co. applies overhead based on direct labor hours. The variable overhead standard is 4 hours at $12 per hour. During February, Jupiter Co. spent $113,400 for variable overhead. 9,150 labor hours were used to produce 2,400 units. What is the variable overhead rate variance?

$5,400 favorable

$3,600 favorable

$1,800 favorable

$3,600 unfavorable

Explanation / Answer

1) Overhead rate = 412000/20600 = 20 per labour hour

Overhead applied = 21100*20 = 422000

Actual overhead = 415100

Overapplied = 422000-415100 = 6900

so answer is b) Manufacturing overhead account would be debited for $6900

2) Variable overhead rate variance = ( 12*9150-113400) = 3600 Unfavorable

so answer is d) $3,600 unfavorable

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