Variable overhead rate variances: It is the difference between standard variable overhead rate and actual variable overhead rate and than multiplying with actual hours. Variable overhead efficiency variances: It is the difference between standard and actual hours, than multiplying with standard rate. Variable overhead spending variances: It is the combined value of the variable overhead rate variance and variable overhead efficiency variance. Actual variable overhead: It is calculated by multipling actual hourwith actual rate. Applied variable overhead: It is calculated by multipling standard hour with standard rate. To compute: The variable overhead rate and efficiency variances and its over or under applied variable overhead.

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Chapter 9, Problem 9ME

To determine

Concept introduction:

Variable overhead rate variances:

It is the difference between standard variable overhead rate and actual variable overhead rate and than multiplying with actual hours.

Variable overhead efficiency variances:

It is the difference between standard and actual hours, than multiplying with standard rate.

Variable overhead spending variances:

It is the combined value of the variable overhead rate variance and variable overhead efficiency variance.

Actual variable overhead:

It is calculated by multipling actual hourwith actual rate.

Applied variable overhead:

It is calculated by multipling standard hour with standard rate.

To compute:

The variable overhead rate and efficiency variances and its over or under applied variable overhead.

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Beverly Company has determined a standard variable overhead rate of $3.90 per direct labor hour and expects to incur 0.50 labor hours per unit produced. Last month, Beverly incurred 1,650 actual direct labor hours in the production of 3,400 units. The company has also determined that its actual variable overhead rate is $2.40 per direct labor hour. Required: Calculate the variable overhead rate and efficiency variances as well as the total amount of over- or underapplied variable overhead. Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Variable Overhead Rate Variance Variable Overhead Efficiency Variance Over- or Underapplied Variable Overhead

Beverly Company has determined a standard variable overhead rate of $3.40 per direct labor hour and expects to incur 0.50 labor hour per unit produced. Last month, Beverly incurred 1,400 actual direct labor hours in the production of 2,900 units. The company has also determined that its actual variable overhead rate is $2.40 per direct labor hour. Calculate the variable overhead rate and efficiency variances as well as the total amount of over- or underapplied variable overhead. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). variable overhead rate variance variable overhead efficiency variance over-or underapplied variable overhead