The following information relates to Regency Manufacturing's overhead costs for the month
Static budget variable overhead $14,200
Static budget fixed overhead $5,600
Static budget direct labor hours 1,000 hours
Static budget number of units 5,000 units
Regency allocates manufacturing overhead to production based on standard direct labor hours.
Regency reported the following actual results for last month: actual variable overhead, $14,500; actual fixed overhead, $5,400; actual production of 4,700 units at 0.22 direct labor hours per unit. The standard direct labor time is 0.20 direct labor hours per unit.
Compute the variable overhead cost variance. (Round the answer to the nearest dollar.)
What will be an ideal response
Variable overhead cost variance = Actual VOH - (SC* x AQ**)
= $14,500 - ($14.20 x 1,034 DLHr)
= $183 U
* Standard VOH allocation rate: Budgeted VOH / Budgeted allocation base
$14,200 / 1,000 = $14.20 per DL Hr
** 4,700 units produced x 0.22 actual direct labor hours per unit =1,034 DLHr
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