Question

If variable manufacturing overhead is applied on the basis of direct labor-hours and the variable overhead rate variance is favorable, then: Garrison 16e Rechecks 2017-08-17 Multiple Choice
the actual variable overhead rate exceeded the standard rate.
the standard variable overhead rate exceeded the actual rate.
the standard direct labor-hours allowed for the actual output exceeded the actual hours.
None of the above

Answer 1

Answer:

Variable overhead rate variance=Actual overhead costs-(actual hours*Standard rate)

Given the variable overhead rate variance is favourable that means the actual overhead rate is less than the standard overhead rate.