14. Required information The Foundational 15 [LO10-1, LO10-2, LO10-3] [The follo

Question

14. Required information The Foundational 15 [LO10-1, LO10-2, LO10-3] [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production Part 14 of 15 based on direct labor-hours and its standard cost card per unit is as follows points Direct materials: 5 pounds at $9 per pound Direct labor: 3 hours at $14 per hour Variable overhead: 3 hours at $9 per hour Total standard cost per unit S 45 42 27 $114 eBook Print Reference The planning budget for March was based on producing and selling 20,000 units. However, during March the company actually produced and sold 24,800 units and incurred the following costs a. Purchased 155,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production. b. Direct laborers worked 65,000 hours at a rate of $15 per hour c. Total variable manufacturing overhead for the month was $612,300. Foundational 10-14 14. What is the variable overhead rate variance for March? (Round the actual overhead rate to two decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input all amounts as positive values.) Variable overhead rate variance

Explanation / Answer

The variable overhead rate variance is (669,600-612,300)= $57,300 Favourable.

As it takes 27$ variable overhead to produce one unit, for production of 24,800 units it should be 27×24,800=669,600 but total variance manufacturing overhead incurred for the month is $612,300. This is the cause for favourable variance as actual is less than the budgeted value.

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