RadiantRadiant Systems allocates manufacturing overhead based on machine hours.

Question

RadiantRadiant Systems allocates manufacturing overhead based on machine hours. Each connector should require 10 machine hours. According to the static budget,Radiant expected to incur the following:

1,000 machine hours per month (100 connectors x 10 machine hours perconnector)

$8,500 in variable manufacturing overhead cost

$7,535 in fixed manufacturing overhead costs

During August, Radiant actually used 400 machine hours to make 125 connectors and spent $5,500 in variable manufacturing costs and $6,000 in fixed manufacturing overhead costs. Calculate the variable overhead cost variance for Radiant.

A. $5,125 F

B. $2,100 U

C. $7,225 F

D. $9,325 F

1,000 machine hours per month (100 connectors x 10 machine hours perconnector)

$8,500 in variable manufacturing overhead cost

$7,535 in fixed manufacturing overhead costs

During August, Radiant actually used 400 machine hours to make 125 connectors and spent $5,500 in variable manufacturing costs and $6,000 in fixed manufacturing overhead costs. Calculate the variable overhead cost variance for Radiant.

A. $5,125 F

B. $2,100 U

C. $7,225 F

D. $9,325 F

Explanation / Answer

Variable overhead cost variance = 5500-(125*10*8.5)= 5125 F Option 1 is correct

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