Highfill Corporation's variable overhead is applied on the basis of direct labor-hours. The standard cost card for product D80D specifies 6.6 direct labor-hours per unit of D80D. The standard variable overhead rate is $6.10 per direct labor-hour. During the most recent month, 1,300 units of product D80D were made and 8,700 direct labor-hours were worked. The actual variable overhead incurred was $56,770. Required: a. What was the variable overhead rate variance for the month

Question

Mina Frost

Business

8 May, 18:50

Highfill Corporation's variable overhead is applied on the basis of direct labor-hours. The standard cost card for product D80D specifies 6.6 direct labor-hours per unit of D80D. The standard variable overhead rate is $6.10 per direct labor-hour. During the most recent month, 1,300 units of product D80D were made and 8,700 direct labor-hours were worked. The actual variable overhead incurred was $56,770. Required: a. What was the variable overhead rate variance for the month

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Answers (1)

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Jessie Hardy · Answer 1

Manufacturing overhead rate variance = $3,741 unfavorable

Explanation:

Giving the following information:

The standard variable overhead rate is $6.10 per direct labor-hour.

During the most recent month, 1,300 units of product D80D were made and 8,700 direct labor-hours were worked. The actual variable overhead incurred was $56,770

To calculate the variable overhead rate variance, we need to use the following formula:

Manufacturing overhead rate variance = (standard rate - actual rate) * actual quantity

actual rate = 56,770/8,700 = $6.53 per hour

Manufacturing overhead rate variance = (6.1 - 6.53) * 8,700

Manufacturing overhead rate variance = $3,741 unfavorable