Answer:
Instructions are below.
Explanation:
Giving the following information:
Standard direct labor hour per unit= 6.5 hours
Standard variable overhead= $6.8 per direct labor hour.
Actual production= 1,300 units
Actual direct labor hours= 8,500 hours
Actual variable overhead= $60,290
A) To calculate the variable overhead rate variance, we need to use the following formula:
Manufacturing overhead rate variance= (standard rate - actual rate)* actual quantity
Actual rate= 60,290/8,500 hours= $7.093
Manufacturing overhead rate variance= (6.8 - 7.093)*8,500= $2,490.5 unfavorable
B) To calculate the variable overhead efficiency variance, we need to use the following formula:
variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate
Standard quantity= 1,300*6.5= 8,450 hours
variable overhead efficiency variance= (8,450 - 8,500)*6.8= $340 unfavorable
