The predetermined overhead rate for Weed-B-Gone is $8, comprised of a variable overhead rate of $5 and a fixed rate of $3. The a

Question

11 days ago

15

The predetermined overhead rate for Weed-B-Gone is $8, comprised of a variable overhead rate of $5 and a fixed rate of $3. The a

mount of budgeted overhead costs at normal capacity of $240,000 was divided by normal capacity of 30,000 direct labor hours, to arrive at the predetermined overhead rate of $8. Actual overhead for June was $15,800 variable and $9,100 fixed, and standard hours allowed for the product produced in June was 3,000 hours. The total overhead variance is:
A. $900 U.

B. $900 F.

C. $4,900 F.

D. $4,900 U.

Business

1 answer:

Nady [2.9K] · Answer 1 · 2026-03-25T17:55:59+03:00

$A. $900 unfavorable. To calculate the total overhead variance: Total overhead variance = Overhead applied - Actual overhead. Overhead applied amounts to the standard hours multiplied by the overhead application rate, resulting in 3,000 hours x $8 = $24,000. Actual overhead combines variable and fixed overhead, totaling $15,800 + $9,100 = $24,900. Thus, the overhead variance is $24,000 - $24,900, which yields an unfavorable variance of $900 because the actual overhead exceeds the applied overhead.