Question

Required information Use the following information for the Quick Study below. (The following information applies to the questions displayed below) Mosaic Company applies overhead using machine hours and reports the following information. Actual machine hours used (AH) 4,800 hours Standard machine hours (for actual production) 5.250 hours (SH) Actual variable overhead rate per hour (AVR) $ 4.90 Standard variable overhead rate per hour (SVR) $ 4.75 QS 21-18A Total variable overhead cost variance LO P5 Compute the total variable overhead cost variance and classify it as favorable, unfavorable or no variance. Actual Cost Standard Cost

Answer 1

Ans. 1	Actual Cost		Standard Cost
	Actual hours * Actual rate		Standard hours * Standard rate
	4,800 * $4.90		5,250 * $4.75
	$23,520		$24,938
		$1,418
	Total overhead variance	$1,418	Favorable
Ans. 2
	Actual Cost		Actual hours at Standard rate		Standard Cost
	Actual hours * Actual rate		Actual hours * Standard rate		Standard hours * Standard rate
	4,800 * $4.90		4,800 * $4.75		5,250 * $4.75
	$23,520		$22,800		$24,938
		-$720		$2,138
	Overhead spending variance	-$720	or   $720 Unfavorable
	Overhead efficiency variance	$2,138	Favorable
	Total Overhead Variance	$1,418	Favorable
	*If the standard cost, rate and hours are higher than the actual it means the variance is favorable.
	*If the standard cost, rate and hours are lower than the actual it means the variance is unfavorable.