Question

Jefferson Co. uses the following standard to produce a single unit of its product: variable overhead $7.40 (2 hrs. per unit @ $3.70/hr.). Actual data for the month show variable overhead costs of $189,480, and 24,700 units produced. The total variable overhead variance is:

Answer 1

The total variable overhead variance is $6,700 unfavorable

Step-by-step explanation:

The total variable overhead is a difference between budgeted overhead and actual overhead.

In mathematically,

Total variable overhead = Budgeted overhead - actual overhead

where,

Budgeted overhead = Variable cost unit produced × variable overhead

= 24,700 × $7.40

= $182,780

And actual overhead is $189,480

So,

Total variable overhead = $182,780 - $189,480 = -$6,700 unfavorable

Hence, The total variable overhead variance is $6,700 unfavorable