The following standards for variable overhead have been esta

The following standards for variable overhead have been established for a company that makes only one product:

What is the variable overhead rate variance for the month? (Input the amount as a positive value. Leave no cells blank - be certain to enter \"0\" wherever required. Indicate the effect of each variance by selecting \"F\" for favorable, \"U\" for unfavorable, and \"None\" for no effect (i.e., zero variance.)

What is the variable overhead efficiency variance for the month? (Input the amount as a positive value. Leave no cells blank - be certain to enter \"0\" wherever required. Indicate the effect of each variance by selecting \"F\" for favorable, \"U\" for unfavorable, and \"None\" for no effect (i.e., zero variance.)

Solution

a) Variable overhead rate variance = (Standard rate-actual rate)actual hours

= (15*8700-125050)

Variable overhead rate variance = 5450 F

b) Variable overhead efficiency variance = (Standard hours-actual hours)Standard rate

= (1730*5-8700)*15

Variable overhead efficiency variance = 750 U