Cheerios is a brand of cereal manufactured by General Mills in the United States, consisting of pulverized oats. General Mills management has established the following standards: Direct materials: 2.5 ounces at $20 per ounce Direct labor: 1.4 hours at $12.50 per hour Variable manufacturing overhead: 1.4 hours at 3.50 per hour Variable manufacturing overhead is applied on the basis of standard direct labor-hours. The following data are available for October 3,750 units of compound were produced during the month. There was no beginning direct materials inventory. Direct materials purchased: 12,000 ounces for $225,000 The ending direct materials inventory was 2,000 ounces. Direct labor-hours worked: 5,600 hours at a cost of $67,200, Variable manufacturing overhead costs incurred amounted to $18,200. Variable manufacturing overhead applied to products: $18,375. The variable overhead rate variance for October is: Variable Manufacturing Overhead rate variance = (AR - SR) AH AR - actual variable manufacturing overhead rate SR - standard variable manufacturing overhead rate AH = actual hours worked - Variable Manufacturing Overhead Efficiency Variance = (AH-SH) SR AH = actual hours worked SH - standard hours for the actual level of production SR - standard variable manufacturing overhead rate Multiple Choice SH - standard hours for the actual level of production SR standard variable manufacturing overhead rate Multiple Choice $1400 Favorable O $1900 Unfavorable $3,750 Favorable $4,375 Unfavorable