The following data have been provided by Lopus Corporation: Budgeted production 2,600unitsStandard machine-hours per unit 2.7machine-hoursStandard lubricants$4.20per machine-hourStandard supplies$2.90per machine-hour Actual production 2,900unitsActual machine-hours 8,080machine-hoursActual lubricants (total)$35,151 Actual supplies (total)$23,038 Required:Compute the variable overhead rate variances for lubricants and for supplies. Indicate whether each of the variances is favorable (F) or unfavorable (U).
What will be an ideal response?
Lubricants:
Variable overhead rate variance = (AH × AR) ? (AH × SR)
= $35,151 ? (8,080 hours × $4.20 per hour)
= $35,151 ? $33,936
= $1,215 U
Supplies:
Variable overhead rate variance = (AH × AR) ? (AH × SR)
= $23,038 ? (8,080 hours × $2.90 per hour)
= $23,038 ? $23,432
= $394 F
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