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Answer :
Answer:
$11,284 favorable.
Explanation:
With regards to the above, we need to compare the actual overhead paid with the overhead budgeted.
Actual variable overhead paid = $157,700
Budgeted variable overhead [46,940 × $3.60] = $168,984
When we compare the actual variable overhead with budgeted variable overhead, we'll have,
= $157,700 - $168,984
= $11,284 Favourable.
It is favourable because the company paid below the budgeted variable overhead.
Therefore, the variable overhead rate variance is $11,284 favourable.
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Final answer:
The Venus Company's variable overhead rate variance is $-0.24 per unit. It's calculated by finding the actual variable overhead cost per unit then subtracting the standard cost. A negative variance indicates that less was spent on variable overhead than planned.
Explanation:
Variable overhead rate variance in business terminology refers to the difference between the actual variable overhead per unit of the measure of activity and the standard rate of variable overhead per unit of the measure. In this case, Venus Company uses direct labor hours as the measure of activity.
To calculate the variance, you first need to find the standard variable overhead rate which is provided as 9 hours at $3.60 per hour, with a total of $32.40 per hour. Then, you should take the actual spent variable overhead ($157,700) and divide it by the total labor hours (46,940 hours). The result gives the actual variable overhead rate. Subtracting the standard from this actual rate will give the variance.
So, the calculations would be: Actual cost per hour = $157,700 ÷ 46,940 hours = around $3.36 per hour. The variance therefore is $3.36 - $3.60 = $-0.24. Therefore, variable overhead rate variance is $-0.24 per hour.
The negative variance means the company spent less on variable overhead than planned.
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