The following information relating to a company's overhead costs is available. Col1 = Actual total variable overhead, Actual total fixed overhead, Budgeted variable overhead rate per machine hour, Budgeted total fixed overhead, Budgeted machine hours allowed for actual outputCol2 = $ 73,000, $ 17,000, $ 2.50, $ 15,000, 30,000 Based on this information, the total variable overhead variance is:A) $2,000 favorable.

B) $6,000 favorable.

C) $2,000 unfavorable.

D) $6,000 unfavorable.

E) $1,000 favorable.

Question

Business

Khalil

14 November, 20:55

The following information relating to a company's overhead costs is available. Col1 = Actual total variable overhead, Actual total fixed overhead, Budgeted variable overhead rate per machine hour, Budgeted total fixed overhead, Budgeted machine hours allowed for actual outputCol2 = $ 73,000, $ 17,000, $ 2.50, $ 15,000, 30,000 Based on this information, the total variable overhead variance is:A) $2,000 favorable.

B) $6,000 favorable.

C) $2,000 unfavorable.

D) $6,000 unfavorable.

E) $1,000 favorable.

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Answers (1)

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Azul Cervantes · Answer 1

A) $2,000 favorable

Explanation:

Actual total variable overhead = $ 73,000

Actual total fixed overhead = $ 17,000

Budgeted variable overhead rate per machine hour = $ 2.50

Budgeted total fixed overhead = $ 15,000

Budgeted machine hours allowed for actual output = 30,000

Budgeted variable overhead = $ 2.50 x 30,000 = $ 75,000

Variable overhead variance = Budgeted variable overhead - Actual total variable overhead

Variable overhead variance = $ 75,000 - $ 73,000 = $ 2,000

Since the actual value is under the budgeted value, the variable overhead variance is $2,000 favorable.