Question

the following standards for variable manufacturing overhead have been established for a company that makes only one product: standard hours per unit of output 8.0 hours standard variable overhead rate $14.40 per hour the following data pertain to operations for the last month: actual hours 2,850 hours actual total variable manufacturing overhead cost $41,770 actual output 200 units what is the variable overhead rate variance for the month? the following standards for variable manufacturing overhead have been established for a company that makes only one product: standard hours per unit of output 8.0 hours standard variable overhead rate $14.40 per hour the following data pertain to operations for the last month: actual hours 2,850 hours actual total variable manufacturing overhead cost $41,770 actual output 200 units what is the variable overhead rate variance for the month? $730 f $18,000 f $18,000 u $730 u

Answer 1

The variable overhead rate variance is calculated as the difference between the actual overhead cost and the standard overhead expected for the actual output. The variance is found to be $12,970 unfavorable, which does not match any of the answer choices provided.

Step-by-step explanation:

To calculate the variable overhead rate variance, we need to compare the actual overhead incurred to the standard overhead expected for the actual production levels. First, we calculate the standard overhead cost that should have been incurred for the actual output by multiplying the standard hours permitted for actual production (8.0 hours per unit) by the standard variable overhead rate ($14.40 per hour) and the number of actual units produced (200 units). This gives us a total of $28,800 (8 hours x $14.40 x 200 units) as the standard cost.

Next, we subtract the actual variable manufacturing overhead cost ($41,770) from the standard cost to find the variance. The variance is $41,770 - $28,800 = $12,970 unfavorable, because the actual cost is higher than the standard cost. However, none of the provided answer choices ($730 F, $18,000 F, $18,000 U, $730 U) match this calculated variance.