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 8,900 MHs Actual level of activity 9,100 MHs Standard variable manufacturing overhead rate $ 7.60 per MH Actual total variable manufacturing overhead $ 66,600 What was the variable overhead rate variance for the month?

Answer 1

Answer:

The variable overhead rate variance for the month is $2,548 favorable

Explanation:

In this question, we use the formula of the variable overhead rate variance which is shown below:

= Actual level of activity × (Standard rate - Actual rate  )

= 9,100 × ($7.60 - $7.32)

= 9,100 × 0.28

= $2,548 favorable

The actual rate is not given in the question, so we have to compute by using the formula which is given below:

= Actual total variable manufacturing overhead ÷ Actual level of activity

= $66,600 ÷ 9,100

= $7.32

Hence, the variable overhead rate variance for the month is $2,548 favorable