Question

Judd Company uses standard costs for its manufacturing division. Standards specify 0.1 direct labor hours per unit of product. The allocation base for variable overhead costs is direct labor hours. At the beginning of the year, the static budget for variable overhead costs included the following data: Production volume 6,300 units Budgeted variable overhead costs $15,000 Budgeted direct labor hours 610 hours At the end of the year, actual data were as follows: Production volume 4.000 units Actual variable overhead costs $15,100 Actual direct labor hours 480 hours What is the variable overhead cost variance? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.) O A $4,191 F OB. $15,100F OC. $3,298 U OD. $15,000 u

Answer 1

variable overhead cost variance is the difference between standard cost for actual production and actual variable overhead cost.

Now, the standard cost per hour = budgeted variable overhead / budgeted direct labor hours

$15000/610hours

=24.59$ per hour

variable overhead cost variance = (Standard cost - actual cost)*actual quantity

($24.59*480hours)-$15,100

=$11,808-$15,100

=$3296 unfavorable [ as the actual cost is higher than standard cost the variance is unfavorable]