Question

Manufacturing overhead data for the production of Product H by Shakira Company, assuming the company uses a standard cost system, are as follows.

Overhead incurred for 51,400 actual direct labor hours worked		$517,500
Overhead rate (variable $8; fixed $2) at normal capacity of 52,000 direct labor hours		$10
Standard hours allowed for work done		51,650

Compute the total overhead variance.

Total overhead variance

$enter the total overhead variance in dollars

select an option UnfavorableFavorableNeither favorable nor unfavorable

Answer 1

Ans.	Total overhead variance = Actual overhead incurred - Budgeted overhead
	$517,500 - $516,500
	$1,000	Unfavorable
	*Calculations:
	*Budgeted overhead = Standard hours allowed * Overhead rate
	51,650 * $10
	$516,500
	*If Actual overhead incurred > Budgeted overhead = Unfavorable variance
	*If Actual overhead incurred < Budgeted overhead = Favorable variance
	*If Actual overhead incurred = Budgeted overhead = None (neither favorable or unfavorable)