The Upton Company uses on the basis of standard direct labor-hours. Data for the

Question

The Upton Company uses on the basis of standard direct labor-hours. Data for the month of a standard costing system in which variable overhead is assigned to production February include the following Variable overhead cost incurred: Total variable overhead variance: Standard hours allowed for actual production: S 48,700 $ 300 F 7,000 6,840 . Actual direct labor-hours worked: A. The variable overhead rate variance is: B. The variable overhead efficiency variance is: C. The standard variable overhead rate per direct labor-hour is:

Explanation / Answer

1 ) Variable Overhead Rate variance = ( SR × AU ) Actual Variable Overhead Cost Variable overhead rate variance = ($7 x 6840) - $48700 820 UF 2) Variable overhead efficiency variance = SH x (AH -SH) Variable overhead efficiency variance = 7 x (6840 - 7000) $1,120.00 F 3) Total variable overhead variance = (AH x AR) - (SH x SR) ($300) = $48,700 - (SH x SR) (SH x SR) = $49,000 7,000 x SR = $49,000 Standard Rate (SR) = $49000/7000 $7.00

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