Question

Viger Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: Budgeted level of activity 9,700 machine-hours Actual level of activity 9,900 machine-hours Standard variable manufacturing overhead rate $6.30 per machine-hour Actual total variable manufacturing overhead $60,390 What was the variable overhead rate variance for the month?

Answer 1

Answer:

Variable manufacturing overhead rate variance= $1,980 favorable

Explanation:

Giving the following information:

Actual level of activity 9,900 machine-hours

Standard variable manufacturing overhead rate $6.30 per machine-hour

Actual total variable manufacturing overhead $60,390

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

Variable manufacturing overhead rate variance= (standard rate - actual rate)* actual quantity

Actual rate= 60,390/9,900= $6.1

Variable manufacturing overhead rate variance= (6.3 - 6.1)*9,900

Variable manufacturing overhead rate variance= $1,980 favorable