Question

Dubberly Corporation's cost formula for its manufacturing overhead is $31,600 per month plus $52 per machine-hour. For the month of March, the company planned for activity of 8,100 machine-hours, but the actual level of activity was 7,980 machine-hours. The actual manufacturing overhead for the month was $476,410. The activity variance for manufacturing overhead in March would be closest to:

Answer 1

Answer:

The activity variance for manufacturing overhead in March would be closest to $6240

Explanation:

As per given Data

Total overheads = $31,600 + (Machine hours x $52)

Bu using this equation we will calculate the activity variance

Planned machine hours = 8,100 hours

Placing value in the formula

Planned Manufacturing overheads = $31,600 + ( 8,100 hours x $52 )

Planned Manufacturing overheads = $452,800

Actual machine hours = 7,980 hours

Applied Manufacturing overheads = $31,600 + ( 7,980 x $52 )

Applied Manufacturing overheads = $446,560

Activity Variance for manufacturing overhead = Planned Manufacturing overheads  - Applied Manufacturing overheads

Activity Variance for manufacturing overhead = $452,800 - $446,560 = $6,240