Question

Manufacturing overhead data for the production of Product H by Shakira Company are as follows.Overhead incurred for 45,100 actual direct labor hours worked $411,000Overhead rate (variable $8; fixed $1) at normal capacity of 50,100 direct labor hours $9Standard hours allowed for work done 46,167Compute the total overhead variance.

Answer 1

Answer:

Total overhead cost variance                                      $

Standard fixed overhead cost ($9 x 45,100 hrs)    405,900

Less: Actual fixed overhead cost                             411,000

Total overhead cost variance                                   5,100 (A)

Explanation:

Total overhead variance is the difference between standard fixed overhead cost and actual fixed overhead cost. Standard fixed overhead cost is overhead rate multiplied by actual direct labour hours. Overhead rate is the total of variable overhead and fixed overhead rate ($8 + $1 = $9).