Answer:
Variable Overhead Rate Variance - $55 favorable
Variable Overhead Efficiency Variance - $275 favorable
Over applied efficiency variance - $330 favorable
Explanation:
The computations are shown below:
Variable Overhead Rate Variance = Actual Hours × (Actual Rate - Standard variable overhead Rate)
= 1,100 hours × ($2.70 - 2.75)
= $55 favorable
Variable Overhead Efficiency Variance = Standard variable overhead Rate × (Actual Hours - Standard Hours)
= $2.75 × (1,100 hours - 1 × 1,200)
= $275 favorable
So, the over-applied variable overhead would be
= $55 favorable + $275 favorable
= $330 favorable
The entry to record this event would include a LOSS OF $40,000.
The equipment original cost = $420,000
Accumulated depreciation = $200,000
Selling price = $180,000
Loss = 180,000 - [420,000 - 200,000]
= 180,000 - 220 = - 40,000
Thus, a loss of $40,000 was experienced in the sale of the equipment.
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