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B3-5 points (12,5%) Zandi Company uses a standard cost accounting system and applies manufacturing overhead to products on the basis of machine hours. The following information is available for the year just ended: Standard variable overhead rate per hour: $2.50 Planned activity during the period: 20,000 machine hours Machine-hour standard: Two completed units per machine hour Actual variable overhead: $55,440 Actual machine hours worked: 23,100 Actual production: 10,700 finished units Required: Calculate the variable overhead variances
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Answer #1

Solution: $1,940

Working:

Actual variable overhead $55,440

Applied overhead: Standard hours allowed * standard rate = 10,700 * 2 * $2.50 = 53,500

Thus Underapplied variable overhead = $1,940

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