ACCA MA · Chapter 12 · Question 6 of 10
Variable production overhead is absorbed at a standard rate of $4 per direct labour hour. In a period, 3,150 labour hours were worked, the standard hours for the actual output were 3,000, and actual variable overhead cost was $12,900. What is the variable overhead expenditure variance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $300 adverse
Explanation
Expenditure variance = (actual hours worked x standard rate) - actual cost = (3,150 x 4) - 12,900 = 12,600 - 12,900 = $300 adverse. The efficiency variance is (3,000 - 3,150) x 4 = $600 adverse, and the total variance is $900 adverse.
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