Question

Pool Manufacturing manufactures parts for one type of pool. The managerial accountant provided the following data for April:Pool ManufacturingManufacturing Report for AprilNumber of parts produced40,000 partsStandard variable manufacturing overhead rate$35 per machine hourStandard hours required per part0.20 machine hoursActual machine hours3,250 machine hoursActual variable manufacturing overhead costs$102,000What are the actual variable manufacturing overhead costs in April associated with the manufacturing the pool parts?The actual costs in April associated with the manufacturing the pool parts = $102,000.The costs are given to you in the information in the problem.

Answer 1

Answer:

Actual variable manufacturing overhead = $102,000

Variable cost variance = $-178,000

Explanation:

Number of parts produced = 40,000 parts

Standard variable manufacturing overhead rate = $35 per machine hour

Standard hours required per part = 0.20 machine hours

Actual machine hours = 3,250 machine hours

Actual variable manufacturing overhead costs = $102,000

Standard hour required to produce 40000 parts = 0.2 × 40000

= 8000 hours

Standard variable manufacturing overhead = 35 × 8000

= $280,000

The actual variable manufacturing overhead costs in April associated with the manufacturing the pool parts is $102,000

Variable cost variance = actual variable manufacturing cost - standard variable manufacturing cost

Variable cost variance = 102000 - 280000

= -178,000

Variable cost variance is $-178,000 (favourable)