Calculating Variable Manufacturing Overhead Variances
Slim Shady Company (SSC) manufactures lampshades. It applies variable overhead on the basis of direct labor hours. Information from SSC’s standard cost card follows:
| Standard Quantity | Standard Rate | Standard Unit Cost |
Variable manufacturing overhead | 0.5 | $0.80 | $0.40 |
During August, SSC had the following actual results
Units produced and sold | 25,000 |
Actual variable overhead | $ 9,490 |
Actual direct labor hours | 13,000 |
Required:
Compute SSC’s variable overhead rate variance, variable overhead efficiency variance, and over- or underapplied variable overhead.
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