The measure of activity in the standard costing system used at Denita, SRL is machining hours....
The measure of activity in the standard costing system used at
Denita, SRL is machining hours. The company's flexible
manufacturing overhead budget and then data regarding the most
recent period's operations are given below:
Flexible Budget:
Budgeted Level of Activity: 7,400 machining hours
Overhead costs at the Budgeted activity level:
Variable Overhead Cost: $60,828
Fixed Overhead Cost: $64,232
Most Recent period's operations:
Actual level of activity: 6,900 machining hours
Standard level of activity for output: 6,880 machining hours
Actual total variable overhead cost: $54,648
Actual total fixed overhead cost: $53,958
What is the variable overhead rate variance?
Homework Answers
Variable Overhead rate Variance = (Standard Rate – Actual Rate)*Actual Hours
= Standard Rate*Actual Hours – Actual Rate*Actual Hours
= 8.22*6,900 – 54,648
= $2,070 Favorable
Note: Standard Rate = Budgeted Cost/Budgeted Hours
= 60,828/7,400
= $8.22
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The measure of activity in the standard costing system used at
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