Question

The predetermined overhead rate for Marigold Corp. is $5, comprised of a variable overhead rate of $3 and a fixed rate of $2. The amount of budgeted overhead costs at normal capacity of $150000 was divided by normal capacity of 30000 direct labor hours, to arrive at the predetermined overhead rate of $5. Actual overhead for June was $7608 variable and $4824 fixed, and standard hours allowed for the product produced in June was 2400 hours. The total overhead variance is:________

a. $700 F.
b. $1,800 F.
c. $700 U.
d. $1,800 U.

Answer 1

$11,568 favorable

Step-by-step explanation:

The computation of the total overhead variance is shown below:

Total Overhead cost variance

= Actual total overhead - Budgeted total overhead

= ($7,608 + $4,824) - (2,400 hours × 2 × 5)

= $12,432 - $24,000

= $11,568 favorable

This is the answer but the same is not provided in the given options