Question

Jefferson Co. uses the following standard to produce a single unit of its product: Variable overhead $6 (2 hrs. per unit @ $3/hr.). Actual data for the month show variable overhead costs of $150,000 and 24,000 units produced. The total variable overhead variance is:
A. 6,000F

B. 6,000U

C. 78,000U

D. 78000F

E 0.

Answer 1

Answer:

B. 6,000U

Explanation:

The total variable overhead variance shall be calculated using the following formula:

Variable overhead variance=(Actual units produced*Standard hours per unit* Standard rate per hour) - (Actual variable production overhead cost of actual production)

Standard rate per hour=$3

Standard hours per unit=2

Actual units produced=24,000

Actual variable production overhead cost of actual production=$150,000

Variable overhead variance=(24,000*2*3-150,000)

                                              =(144,000-150,000)

                                              =$6,000U

So the answer is B. 6,000U