Ask Question
9 May, 05:25

Highfill Corporation's variable overhead is applied on the basis of direct labor-hours. The standard cost card for product D80D specifies 6.5 direct labor-hours per unit of D80D. The standard variable overhead rate is $6.80 per direct labor-hour. During the most recent month, 1,300 units of product D80D were made and 8,500 direct labor-hours were worked. The actual variable overhead incurred was $60,290.

Required:

A. What was the variable overhead rate variance for the month?

B. What was the variable overhead efficiency variance for the month?

+1
Answers (1)
  1. 9 May, 07:55
    0
    Instructions are below.

    Explanation:

    Giving the following information:

    Standard direct labor hour per unit = 6.5 hours

    Standard variable overhead = $6.8 per direct labor hour.

    Actual production = 1,300 units

    Actual direct labor hours = 8,500 hours

    Actual variable overhead = $60,290

    A) 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 = 60,290/8,500 hours = $7.093

    Manufacturing overhead rate variance = (6.8 - 7.093) * 8,500 = $2,490.5 unfavorable

    B) To calculate the variable overhead efficiency variance, we need to use the following formula:

    variable overhead efficiency variance = (Standard Quantity - Actual Quantity) * Standard rate

    Standard quantity = 1,300*6.5 = 8,450 hours

    variable overhead efficiency variance = (8,450 - 8,500) * 6.8 = $340 unfavorable
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Highfill Corporation's variable overhead is applied on the basis of direct labor-hours. The standard cost card for product D80D specifies ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers