Question

In October, Roby Company reports 18,930 actual direct labor hours, and it incurs $128,350 of manufacturing overhead costs. Standard hours allowed for the work done is 23,750 hours. The predetermined overhead rate is $5.42 per direct labor hour.Compute the total overhead variance.

Answer 1

Total overhead variance = $375 (Favorable)

Step-by-step explanation:

Given:

Actual direct labor hours = 18,930

Manufacturing overhead costs = $128,350

Standard hours = 23,750

Predetermined overhead rate = $5.42

Total overhead variance = ?

Computation of total overhead variance:

Total overhead variance = Actual overhead cost - [(Standard hours)(Predetermined overhead rate)]

Total overhead variance = $128,350 - [(23,750)($5.42)]

Total overhead variance = $128,350 - [$128,725]

Total overhead variance = $375 (Favorable)