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In October, Pine Company reports 22,000 actual direct labor hours, and it incurs $114,900 of manufacturing overhead costs. Standard hours allowed for the work done is 21,500 hours. The predetermined overhead rate is $5.39 per direct labor hour.
Compute the total overhead variance. (Round answer to 0 decimal places, e.g. 125.)
Total Overhead Variance $ FavorableNeither favorable nor unfavorableUnfavorable

Respuesta :

Answer:

Total Overhead Variance = $985 Favorable

Explanation:

Actual Direct Labor Hours = 22,000

Actual Cost = $114,900

Actual Rate = $114,900/22,000 = $5.22

Standard Hours = 21,500

Standard Rate = $5.39

Total Overhead Variance = Standard Cost - Actual Cost

Standard Cost = 21,500 [tex]\times[/tex] $5.39 = $115,885

Actual Cost = $114,900

Total Overhead Variance = $115,885 - $114,900 = $985 Favorable as the actual cost is less than standard cost of overheads.

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