A manufacturing company that has only one product has established the following

Question

A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on direct labor-hours. Standard hours per unit of output Standard variable overhead rate 5.40 DLHs s11.67 per DLH The following data pertain to operations for the last month: Actual direct labor-hours Actual total variable manufacturing overhead cost Actual output 8, 900 DLHs $95,880 1,500 units What is the variable overhead rate variance for the month?

Explanation / Answer

Variable overhead rate variance = (standard rate-actual rate)actual hours

                                              = (11.67*8900-95880)

Variable overhead rate variance = 7983 F

so answer is b) $7983 F

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