Judd Company uses standard costs for its manufacturing division. Standards specify 0.1 direct labor hours per unit of product. The allocation base for variable overhead costs is direct labor hours. At the beginning of the year, the static budget for variable overhead costs included the following dа ta:

Production volume 6,300 units

Budgeted variable overhead costs $ 16,000

Budgeted direct labor hours 650 hours

At the end of the year, actual data were as follows:

Production volume 4,100 units

Actual variable overhead costs $ 15,300

Actual direct labor hours 485 hours

What is the variable overhead cost variance? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

A. $15,000 U

B. $5,161 F

C. $3,891 U

D. $15,200 F

Question

Business

Floyd

11 June, 04:37

Judd Company uses standard costs for its manufacturing division. Standards specify 0.1 direct labor hours per unit of product. The allocation base for variable overhead costs is direct labor hours. At the beginning of the year, the static budget for variable overhead costs included the following dа ta:

Production volume 6,300 units

Budgeted variable overhead costs $ 16,000

Budgeted direct labor hours 650 hours

At the end of the year, actual data were as follows:

Production volume 4,100 units

Actual variable overhead costs $ 15,300

Actual direct labor hours 485 hours

What is the variable overhead cost variance? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

A. $15,000 U

B. $5,161 F

C. $3,891 U

D. $15,200 F

+5

Answers (1)

Know the Answer?

Tyson Shea · Answer 1

Variable overhead cost variance is 3,361.725 U

Explanation::

Budgeted variable overhead costs = $16,000

Budgeted direct labor hours = 650 hours

Budgeted variable overhead per labor hour = 16000 / 650 = 24.615

Budgeted variable overhead costs to be incurred for actual labor hours =

Actual direct labor hours x Budgeted variable overhead per labor hour

= 485 * 24.615

= 11,938.275

Actual variable costs actually incurred = 15,300

Variable overhead cost variance = Actual variable costs actually incurred - Actual direct labor hours x Budgeted variable overhead per labor hour

=15,300 - 11,938.275

=3,361.725

=3,361.725 U