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

A) $1,900 Unfavorable

B) $1,400 Favorable

C) $3,750 Favorable

D) $4,375 Unfavorable