Question

1. Garnet Developers Inc., a manufacturing company, provides the following data:

Standard variable overhead rate (SVOR)	$4 per direct labor hour
Actual variable overhead costs (AH)	$900
Standard hours allowed per unit	0.20 hours
Actual direct labor hours worked (AH)	120 hours
Actual production	1,200 units

What is the total variable overhead variance?

1. $60 (unfavorable)
2. $60 (favorable)
3. $15 (unfavorable)
4. $15 (favorable)

2. What is the equation to calculate variable overhead spending variance?

1. Variable Overhead Spending Variance = Actual Variable Overhead - (Actual Direct Labor Hours x Standard Variable Overhead Rate)
2. Variable Overhead Spending Variance = (Actual Direct Labor Hours - Standard Direct Labor Hours for Actual Production) x Standard Variable Overhead Rate
3. Variable Overhead Spending Variance = Actual Variable Overhead - (Standard Direct Labor Hours for Actual Production x Standard Variable Overhead Rate)
4. Variable Overhead Spending Variance = (Actual Direct Labor Hours + Standard Direct Labor Hours for Actual Production) x Standard Variable Overhead Rate

3. Which of the following might result in a variable overhead spending variance?

1. The prices for individual variable overhead items remain unchanged.
2. The decrease in the waste or inefficiency in the use of variable overheads.
3. The use of the items that comprise variable overhead.
4. Increase in price of raw materials due to low demand and recessionary pressure on economy.

4. Responsibility for the variable overhead efficiency variance is most likely to be assigned to a/an _____.

1. purchases manager
2. sales manager
3. operations manager
4. production manager

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.