Calculating the Total Overhead Variance Standish Company manufactures consumer p

Question

Calculating the Total Overhead Variance

Standish Company manufactures consumer products and provided the following information for the month of February:

Units produced 131,400

Standard direct labor hours per unit 0.2

Standard variable overhead rate (per direct labor hour) $3.40

Actual variable overhead costs $88,650

Actual hours worked 26,850

Required:

1. Calculate the total variable overhead variance.

$__________ Favorable

2. What if actual production had been 128,900 units? How would that affect the total variable overhead variance? Indicate what the new variance would be below.

$__________ Unfavorable

Explanation / Answer

1) Total variable overhead variance = (131400*.2*3.40)-88650 = 702 Favorable

2) Total variable overhead variance = (128900*.2*3.4)-88650 = 998 Unfavorable

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