Answer:
1. Standard labour hours allowed
= 0.04 hour x 115,000 units = 4,600 hours
2. Standard variable overhead cost allowed
= 4,600 hours x $2.80 = $12,880
3. Variable overhead spending variance
= ( Standard rate x Actual hours) - Actual variable overhead cost
= ($2.80 x 3,800 hours) - $10,450
= $190(F)
4. Variable overhead rate variance
= (Standard rate - Actual rate) x Actual hours worked
= ($2.80 - $2.75) x 3,800 hours
= $190(F)
Variable overhead efficiency variance
= (Standard hours - Actual hours) x Standard rate
= (4,600 - 3,800) x $2.80
= $2240(F)
Explanation:
The standard labour hours allowed is calculated by multiplying the standard hours allowed per unit by the number of items shipped.
The standard variable overhead cost allowed is the product of standard hours and standard rate.
Variable overhead spending variance is the difference the budgeted variable overhead and actual variable overhead cost. Budgeted variable overhead cost is the product of standard variable overhead rate and actual hours.
Variable overhead efficiency variance is the difference between standard hours and actual hours multiplied by standard variable overhead rate.
Variable overhead rate variance is the difference between standard rate and actual rate multiplied by actual hours worked.
