Question
): Calcagno Corporation's variable overhead is applied on the basis of direct labor-hours. The company has established the following variable overhead standards for product B47W:
): Calcagno Corporation's variable overhead is applied on the basis of direct labor-hours. The company has established the following variable overhead standards for product B47W:
Standard direct labor-hours per unit of B47W. 3.0
Standard variable overhead rate$9.40 per hour
The following data pertain to the most recent month's operations during which 520 units of product B47W were made:
Actual direct labor-hours worked.1,400
Actual variable overhead incurred..$13,580 Required: a. What was the variable overhead rate variance for the month? Indicate whether it is favorable or unfavorable. (Variable overhead rate variance=(AHxAR)-(AHxSR)) b. What was the variable overhead efficiency variance for the month? Indicate whether it is favorable or unfavorable. (Variable overhead efficiency variance=SR(AH-SH))
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