E9-15 Calculating Variable Manufacturing Overhead Variances [LO 9-5] See Clear C

Question

E9-15 Calculating Variable Manufacturing Overhead Variances [LO 9-5] See Clear Company manufactures clear plastic CD cases. It applies variable overhead based on the number of machine hours used. Information regarding See Clear's overhead for the month of December follows: Standard Unit Cost Standard Rate $1.30 per machine hour Standard Quantity Variable manufacturing 0.5 machine hours per S 0.65 overhead case During December, See Clear had the following actual results: Number of units produced and sold Actual variable overhead cost Actual machine hours 125,000 70,000 62,000 Required: Compute See Clear's variable overhead rate variance, variable overhead efficiency variance, and over- or underapplied variable overhead. (Do not round intermediate calculations Indicate the effect of each variance by selecting "F" for Favorable/Overapplied and "U" for Unfavorable/Underapplied.) Variable Overhead Rate Variance Variable Overhead Efficiency Variance r-or Underapplied Variable Overhead

Explanation / Answer

Variable overhead rate variance=70000-(62000*1.3)= $10600 F Variable overhead efficiency variance=1.3*(62000-125000*0.5)= $650 F Over-underapplied variable overhead=70000-(125000*0.65)= $11250 F

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