Answer:
a. The variable overhead rate variance for the month is:
= $7,771 F
b. The variable overhead efficiency variance for the month is:
= $672 U.
Explanation:
a) Data and Calculations:
Standard hours per unit of output = 6.8 hours
Standard variable overhead rate = $14.00 per hour
Total standard hours = 9,452 (6.8 * 1,390)
Actual hours = 9,500 hours
Actual total variable overhead cost = $125,230
Actual rate per hour = $13.18 ($125,230/$9,500)
Actual output = 1,390 units
Variable overhead rate variance for the month = (Standard rate - Actual rate) * Actual hours = $14 - $13.182 * 9,500 = $7,771 F
Variable overhead efficiency variance for the month = (Standard hours - Actual hours) * Standard Rate
= 9,452 - 9,500 * $14 = $672 U
Total variable overhead variance for the month = $7,099 F ($7,771 - $672)
Total standard variable overhead cost = 6.8 * $14 * 1,390 = $132,328
Actual variable overhead cost for the month = 125,230
Variance for variable overhead cost for the month = $7,098
