Wisteria Co. produces snowboards and uses a standard cost system. Variable overh

Question

Wisteria Co. produces snowboards and uses a standard cost system. Variable overhead is applied using direct labor hours. Standards allowed for each unit are 5.2 hours of labor at a standard variable overhead rate of $8.20. During December, Wisteria Co. produced 3,000 snowboards. Materials purchases totaled 21,100 pounds at a total cost of $224,780. Materials usage totaled 21,030 pounds. Payroll totaled $183,670 for 17,150 hours worked. Variable overhead incurred totaled $137,760. a. Calculate the variable overhead rate variance. (Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable", "Unfavorable, or "None" for no effect(i.e., zero variance).) RateVariance b. Calculate the variable overhead efficiency variance. (Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).)

Explanation / Answer

Rate variance = 137760-(17150*8.2)= 2870 Favorable Efficiency variance = 8.2*(17150-3000*5.2)= 12710 Unfavorable

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