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30 January, 03:50

Jefferson Co. uses the following standard to produce a single unit of its product: Variable overhead $6 (2 hrs. per unit @ $3/hr.). Actual data for the month show variable overhead costs of $150,000 and 24,000 units produced. The total variable overhead variance is:

A. 6,000F

B. 6,000U

C. 78,000U

D. 78000F

E 0.

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Answers (1)
  1. 30 January, 03:55
    0
    B. 6,000U

    Explanation:

    The total variable overhead variance shall be calculated using the following formula:

    Variable overhead variance = (Actual units produced*Standard hours per unit * Standard rate per hour) - (Actual variable production overhead cost of actual production)

    Standard rate per hour=$3

    Standard hours per unit=2

    Actual units produced=24,000

    Actual variable production overhead cost of actual production=$150,000

    Variable overhead variance = (24,000*2*3-150,000)

    = (144,000-150,000)

    =$6,000U

    So the answer is B. 6,000U
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