The following data for November have been provided by Hunn Corporation, a producer of precision drills for oil exploration: Budgeted production 3,700 drillsStandard machine-hours per drill 9.0 machine-hoursStandard indirect labor$8.80 per machine-hourStandard power$2.40 per machine-hour Actual production 3,900 drillsActual machine-hours 35,350 machine-hoursActual indirect labor$313,923 Actual power$83,310 Required:Compute the variable overhead rate variances for indirect labor and for power for November. Indicate whether each of the variances is favorable (F) or unfavorable (U).
What will be an ideal response?
Indirect labor:
Variable overhead rate variance = (AH × AR) ? (AH × SR)
= $313,923 ? (35,350 hours × $8.80 per hour)
= $313,923 ? $311,080
= $2,843 U
Power:
Variable overhead rate variance = (AH × AR) ? (AH × SR)
= $83,310 ? (35,350 hours × $2.40 per hour)
= $83,310 ? $84,840
= $1,530 F
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