Question

Rath Company provided the following information:

Standard variable overhead rate (SVOR) per direct labor hour $3.75
Actual variable overhead costs $222,816
Actual direct labor hours worked (AH) 57,200
Actual production in units 15,000
Standard hours (SH) allowed for actual units produced 60,000

Using the columnar approach, calculate the variable overhead spending and efficiency variances.

Answer 1

The correct answer is $8,316( Unfavorable) and $10,500 ( Favorable).

Step-by-step explanation:

According to the scenario, the computation of the given data are as follows:

Actual Variable OH AH × SVOR SH × SVOR

$222,816 $57,200×$3.75 = $214,500 $60,000×$3.75 = $225,000

Variable OH spending variance Variable OH efficiency variance

$214,500 - $22,816) $225,000 - $214,500

= $8,316( Unfavorable) = $10,500 ( Favorable)

Hence, Variable OH spending variance = $8,316( Unfavorable)

And Variable OH efficiency variance = $10,500 ( Favorable)