Question

The following data have been provided by Furr Corporation: Budgeted production 7,000 motors Standard machine-hours per motor 8.6 machine-hours Standard indirect labor rate $ 7.10 per machine-hour Standard power rate $ 1.40 per machine-hour Actual production 7,300 motors Actual machine-hours (total) 62,140 machine-hours Actual indirect labor cost (total) $ 408,340 Actual power cost (total) $ 94,989 Indirect labor and power are both elements of variable manufacturing overhead. The variable overhead rate variance for power is closest to:

Answer 1

Answer:

Variable manufacturing overhead rate variance= $8,078.2 unfavorable

Explanation:

Giving the following information:

Standard power rate $ 1.40 per machine-hour

Actual machine-hours (total) 62,140 machine-hours

Actual power cost (total) $ 94,989

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= 94,989/62,140= $1.53

Variable manufacturing overhead rate variance= (1.4 - 1.53)*62,140

Variable manufacturing overhead rate variance= $8,078.2 unfavorable