n Luis Corporation uses a standard cost system in which it applies manufacturing

Question

n Luis Corporation uses a standard cost system in which it applies manufacturing overhead to products on the basis of machine hours (MHs) . The companys standard requires 4 MHis for each unit produced. Luis budgets to produce L.000 units per month with a budgeted variable manufacturing overhead (MOH) of SS8,000 per month. During the last month the company produced 1,200 units of product and incurred a total $8512s in VMOH. AK AP AS A SE STOP If the VMOHEiciency Variance was s900 favorable, what was VMOH Rate variance? S7 Unfavorable SHSP 75 unfavorable DS2137s favorable E. None of the above a to (8 3D 9 512 S 2 a ODF

Explanation / Answer

Standard overhead rate = 88000/(1000*4)= 22 VMOH efficiency varaince = Standard rate*(Standard hours-Actual hours) 900 = 22*(1200*4-Actual hours) 40.91 = 4800-Actual hours Actual hours = 4759.09 Variable overhead rate variance = 85125-(22*4759.09)= 19757 favorable Option B is correct

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