Test, Inc. is in the business of producing study materials for exams. Test has some information related to its operations provided. Calculate the required variances for this problem using the given information.

 

Test produced 700,000 test preparation documents. Test uses direct materials to allocate overhead. Tests expected to have an overhead rate of $0.0125 cents. Actual Variable overhead costs were $1,600. Test expected to use 0.2 pounds of materials per test prep document, but actually used 0.195 pounds per document.

 

REQUIRED:

1) Calculate the Rate, Efficiency, and Total Variance for Variable Overhead. Interpret these results to receive credit.