Question

Kellar Corporation manufactured​ 1,500 chairs during June. The following variable overhead data pertain to​ June:

Budgeted variable overhead cost per unit	​$12.00
Actual variable manufacturing overhead cost	​$16,800

Flexible-budget amount for variable manufacturing overhead	​$18,000
Variable manufacturing overhead efficiency variance	​$360 unfavourable

Which one of the following amounts is the variable overhead rate​ variance?

A.

​$1,200 favourable

B.

​$1,560 favourable

C.

​$1,200 unfavourable

D.

​$1,560 unfavourable

Answer 1

variable manufacturing overhead efficiency variance is difference between actual units and budgeted units multiplied by standard rate per unit

variable overhead rate​ variance is difference between actual variable overhead and actual hour multiplied by standard rate

=actual variable overhead - (Actual unit* standard rate)

=$16,800 - (1500*$12)

=$16,800 - $18,000

=$1200 favorable

the variance is favorable when the actual overhead is lesser than the budgeted overhead for actual units.

here the actual overhead $16800 < $18000 so variance will be favorable.