Question

Descamps Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.

Inputs	Standard Quantity or Hours per Unit of Output	Standard Price or Rate
Variable manufacturing overhead	0.20 hours	$6.10 per hour

The company has reported the following actual results for the product for July:

Actual output		4,200	units
Actual direct labor-hours		780	hours
Actual variable overhead rate	$	6.20	per hour

The variable overhead rate variance for the month is closest to:

Multiple Choice

$78 F

$84 F

$78 U

$84 U

Answer 1

Answer:- Variable overhead rate variance = (Standard rate –Actual rate)*Actual working hours

                                        =($6.10 per hour - $6.20 per hour)*780 hours

                                        =$78 Unfavourable