Beverly Company has determined a standard variable overhead rate of $3.00 per di

Question

Beverly Company has determined a standard variable overhead rate of $3.00 per direct labor hour and expects to incur 2 labor hours per unit produced. Last month, Beverly incurred 9,700 actual direct labor hours in the production of 5,000 units. The company has also determined that its actual variable overhead rate is $3.10 per direct labor hour. 45. What is the variable overhead rate variance? a. $970 F b. $900 F c. $970 U d. $70 U 46. What is the variable overhead efficiency variance? a. $970 U b. $900 F c. $900 U d. $70 U

Explanation / Answer

45)Calculation of variable overhead rate variance: Variable overhead rate variance = (Standard Rate-Actual Rate)* Actual Hours                                                                      =(3-3.10)*9700                                                                        =970 U So correct answer is c) $970 U 46)Calculation of variable overhead efficiency variance: Variable overhead efficiency variance = (Standard Hours-Actual hours)*Standard rate                                                        = (10000-9700)*3                                                        = 900 F So correct answer is b) $900 F Working: Standard hours= 2*5000units= 10000 hours

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