Calculating a variable overhead variance Hahn Manufacturing Company established a predetermined variable overhead cost rate of $40 per direct labor hour. The actual variable overhead cost rate was $38 per direct labor hour. Hahn planned to use 150,000 hours of direct labor. It actually used 152,000 hours of direct labor.
Required
a. Determine the total flexible budget variable overhead cost variance.
b. Many companies do not subdivide the total variable overhead cost variance into price and usage components. Under what circumstances would it be appropriate to distinguish between the price and usage components of a variable overhead cost variance? What would be required to accomplish this type of analysis?