Question

1 points eBookPrintReferencesCheck my workCheck My Work button is now enabledItem 6 Beverly Company has determined a standard variable overhead rate of $3.80 per direct labor hour and expects to incur 0.50 labor hour per unit produced. Last month, Beverly incurred 1,600 actual direct labor hours in the production of 3,300 units. The company has also determined that its actual variable overhead rate is $2.40 per direct labor hour. Calculate the variable overhead rate and efficiency variances as well as the total amount of over- or underapplied variable overhead.

Answer 1

$8,700

Step-by-step explanation:

Variable Overhead Rate Variance = Actual Hours *(Actual Rate - Standard Rate) =

Variable Overhead Rate Variance = 1,600 * ($2.40 - $3.80)

Variable Overhead Rate Variance = 1,600 * $1.40 F

Variable Overhead Rate Variance = $2240 F

Variable Overhead Efficiency Variance = Standard Rate*(Actual Hours - Standard Hours) =

Variable Overhead Efficiency Variance = $3.80*(1,600 - 0.50*3,300)

Variable Overhead Efficiency Variance = $3.80* 50 F

Variable Overhead Efficiency Variance = $190 F

Over- or Underapplied Variable Overhead = Actual Overhead Incurred - Overhead Applied

Over- or Underapplied Variable Overhead = 1600*$2.40 - 3,300*$3.80

Over- or Underapplied Variable Overhead = $3840 - $12540

Overapplied Variable Overhead = $8,700