Question

Wall Corporation, which produces commercial safes, has provided the following data:

Budgeted production	9,300	safes
Standard machine-hours per safe	8.0	machine-hours
Standard supplies cost	$   8.60	per machine-hour
Actual production	9,500	safes
Actual machine-hours	76,360	machine-hours
Actual supplies cost	$706,566

Supplies cost is an element of variable manufacturing overhead.

The variable overhead rate variance for supplies is closest to:

$52,966 U

$49,870 F

$52,966 F

$49,870 U

Answer 1

Answer:

Option D: $ 49,870 U

Explanation:

It is given that:

Standard Rate	$   8.60
Standard hours	76,000	9500*8
Actual rate	$   9.25	706566/76360
Actual hours	76,360

Now,

Variable Overhead Rate Variance =	(Standard Rate - Actual Rate) * Actual hours
Variable Overhead Rate Variance =	( $ 8.6 - $ 9.25) * 76360
Variable Overhead Rate Variance =	$ (49,870) Unfavorable

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