Cost Accounting Quiz: Variable Overhead Variances

A company's total variable overhead variance was $1,500 unfavorable. The variable overhead spending variance was calculated to be $4,200 unfavorable. What was the company's variable overhead efficiency variance?

Pacific Industries uses machine hours to allocate variable overhead and has established a standard rate of $25 per machine hour. During September, the variable overhead spending variance was $8,000 unfavorable and the efficiency variance was $5,000 favorable. If 3,200 machine hours were actually used during the month, what was the standard quantity of machine hours allowed for the actual level of production achieved?

A company manufactures two products, Alpha and Beta. Variable overhead is applied at a standard rate of $12 per machine hour. Standard and actual data for the month are as follows:

• Product Alpha: 500 units produced. Standard of 2.0 MH/unit. Actual total MH used: 1,050.
• Product Beta: 300 units produced. Standard of 3.0 MH/unit. Actual total MH used: 880.

What is the total variable overhead efficiency variance for the company for the month?

Variable overhead is allocated based on machine hours (MH), which includes both active run time and setup time. The standard is 4.0 MH per batch of 100 units. The standard VOH rate is $18 per MH. In June, the company produced 500 units (5 batches). Actual machine hours were 18 hours of run time and 3 hours of setup time.

What is the variable overhead efficiency variance?

Pioneer Co. has a standard variable overhead rate of $8.00 per machine hour. For a recent production run of 1,000 units, the company used 2,100 machine hours. The company's controller determined that the actual variable overhead rate was 5% higher than the standard rate. What was the variable overhead spending variance for this production run?

Amalgamated Industries provides the following data related to its manufacturing operations for March:

• Budgeted fixed overhead: $50,000
• Standard variable overhead rate: $3.00 per direct labor hour
• Standard direct labor hours per unit: 1.5 hours
• Units in beginning work-in-process: 1,000
• Units started and completed: 8,000
• Actual direct labor hours worked: 12,300
• Actual variable overhead incurred: $36,000

What is the variable overhead spending variance for March?

Giga Industries uses a standard costing system and applies variable overhead based on direct labor hours. The following information is available for June:

• Standard variable overhead rate: $6.00 per direct labor hour
• Standard direct labor hours per unit: 2.5 hours
• Actual units produced: 4,000 units
• Actual direct labor hours worked: 10,300 hours
• Total actual variable overhead cost: $60,750

What is the variable overhead spending variance for June?

A manufacturing firm applies variable overhead based on machine hours (MH). The standard rate is $4.00 per MH, and 1.5 MH are allowed per unit. The firm also tracks direct labor hours (DLH), with a standard of 2.0 DLH per unit. In April, 10,000 units were produced. Actual costs and hours were:

• Actual machine hours: 15,500 MH
• Actual direct labor hours: 19,800 DLH
• Actual variable overhead cost: $63,550

What is the variable overhead efficiency variance for April?

A company reported a significant unfavorable variable overhead efficiency variance for the period. Its variable overhead spending variance was slightly favorable. Which of the following is the most plausible explanation for this combination of variances?

For the month of October, Aero Manufacturing reported a total actual variable overhead cost of $43,000 based on 4,800 machine hours worked. The company also reported a $2,600 unfavorable variable overhead spending variance for the month.

Based on this information, what is the standard variable overhead rate per machine hour?

Zenith Corp. produces a single product and applies variable overhead based on direct labor hours. The company's standards allow for 2.0 direct labor hours per unit at a standard rate of $7.50 per hour. During July, the company produced 1,500 units. The accounting records show that 3,120 direct labor hours were worked, and the total variable overhead cost incurred was $24,180.

What is the variable overhead spending variance for July?

Orion Company's static budget for May was based on production of 5,000 units, with a standard of 3 direct labor hours per unit for a total of 15,000 standard hours. The standard variable overhead rate is $5 per direct labor hour. In May, the company actually produced 5,200 units and worked 15,800 direct labor hours.

What is Orion's variable overhead efficiency variance for May?

Matrix Corp. applies variable overhead based on machine hours. For the current period, the following data is available:

• Standard machine hours per unit: 0.8 hours
• Standard variable overhead rate: $20.00 per hour
• Actual units produced: 10,000 units
• Actual machine hours worked: 8,300 hours
• Actual variable overhead rate: $19.50 per hour

What is the variable overhead efficiency variance for the period?

A manufacturing company applies variable overhead based on machine hours. The company's static budget for the year was based on producing 100,000 units, requiring 50,000 machine hours. For the most recent month, the company produced 8,000 units. The standard variable overhead cost per unit is $12.00, based on a standard of 0.5 machine hours per unit.

Actual machine hours for the month totaled 4,300, and the standard variable overhead rate is $24.00 per machine hour. What is the variable overhead efficiency variance for the month?

A company's purchasing department variable overhead is allocated based on the number of purchase orders processed. The standard is one purchase order per $5,000 of raw materials purchased, at a standard cost of $40 per order. In the last quarter, the company purchased $640,000 of raw materials by processing 135 purchase orders. Actual variable overhead for the department was $5,250.

What was the purchasing department's variable overhead efficiency variance for the quarter?

A company budgets variable overhead at $10.00 per direct labor hour. In a recent period, the company produced 5,000 units and incurred an unfavorable variable overhead efficiency variance of $4,000. The actual direct labor hours worked during the period were 10,400.

What is the standard number of direct labor hours allowed per unit of output?

A company allocates variable manufacturing overhead based on direct labor hours. An unfavorable direct labor efficiency variance is recorded for the period. Assuming no other changes in production processes or costs, what is the most likely corresponding impact on the variable overhead variances?

A company has a $4,000 unfavorable variable overhead spending variance and a $2,500 favorable variable overhead efficiency variance. The standard variable overhead rate is $20 per hour, and 10,000 actual hours were worked.

What was the total actual variable overhead cost for the period?

For the year, a company reported a total variable overhead variance of $500 Favorable. The variable overhead efficiency variance was determined to be $2,000 Unfavorable. The standard variable overhead rate is $25 per standard machine hour allowed.

If 10,000 standard machine hours were allowed for the year's production, what was the total actual variable overhead cost?

Alpine Products has a standard variable overhead rate of $22 per machine hour. In March, the company incurred $95,700 in actual variable overhead costs and used 4,500 machine hours. The standard hours allowed for actual production were 4,200 hours. If management wants to analyze what portion of the total variance is due to using a different overhead rate than standard versus using more hours than standard, what are the spending and efficiency variances respectively?