Wisteria Co. produces snowboards and uses a standard cost system. Variable overh

Question

Wisteria Co. produces snowboards and uses a standard cost system. Variable overhead is applied using direct labor hours. Standards allowed for each unit are 5.3 hours of labor at a standard variable overhead rate of $7.70. During December, Wisteria Co. produced 3,050 snowboards. Materials purchases totaled 21,100 pounds at a total cost of $224,780. Materials usage totaled 21,070 pounds. Payroll totaled $183,670 for 17,140 hours worked. Variable overhead incurred totaled $129,208. a. Calculate the variable overhead rate variance. (Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).) ate Variance b. Calculate the variable overhead efficiency variance. (Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (l.e, zero variance).) Efficiency Variance

Explanation / Answer

Variable overhead variance (actual rate-standard rate)*actual hours (129,208    - 7.7*17,140) 2,770 F Variable overhead Efficiency variance (Actual hours - standard hours)*standard rate (17,140     - 3050*5.3)*7.7 7507.5 U

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