Question

Fluorspar Company's standard variable overhead rate is $4.00 per direct labor hour, and each unit requires 3 standard direct labor hours. During March, Fluorspar recorded 3,000 actual direct labor hours, $40,000 actual variable overhead costs, and 2,500 units of product manufactured. What is the total variable overhead variance for March for Fluorspar

Answer 1

$10,000 unfavorable

Step-by-step explanation:

The computation of the total variable overhead variance is shown below:

Total variable overhead variance is

= (Actual variable overhead cost - (manufactured units × standard variable overhead rate × required standard direct labor hours))

= ($40,000 - (2,500 units × $4 × 3)]

= $40,000 - $30,000

= $10,000 unfavorable

Since actual cost is more than the standard cost so it would be unfavorable variance