Termeer Inc. has provided the following data concerning one of the products in i

Question

Termeer Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. Inputs Standard Quantity or Hours per Unit of Output Standard Price or Rate Variable manufacturing overhead 0.30 hours $2.30 per hour The company has reported the following actual results for the product for August: Actual output 8,000 units Actual direct labor-hours 2,380 hours Actual variable overhead rate $ 2.10 per hour Actual variable overhead cost $ 4,998 The variable overhead rate variance for the month is closest to: Multiple Choice

$476 U

$480 F

$476 F

Termeer Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.

The company has reported the following actual results for the product for August:

The variable overhead rate variance for the month is closest to:

Multiple Choice

$476 U

$480 F

$476 F

Inputs Standard Quantity or Hours per Unit of Output Standard Price or Rate Variable manufacturing overhead 0.30 hours $2.30 per hour

Explanation / Answer

Solution:

Variable overhead rate variance = (AHx AR) - (AHxSR)

Variable overhead rate variance = $4,998 - 2,380 x $2.30

Variable overhead rate variance = $4,998 - $5,474

Variable overhead rate variance = $460 F

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