Raven applies overhead based on direct labor hours. The variable overhead standard is 16 hours at $25 per hour. During July, Raven spent $217,700 for variable overhead. 8,190 labor hours were used to produce 300 units. What is the variable overhead rate variance

Raven

The variable overhead rate variance is:

$12,940.20

Explanation:

Standard variable overhead rate = $25 per hour

Variable overhead cost = $217,700

Direct labor hours = 8,190

Units produced = 300

Actual variable overhead rate = $217,700/8,190 = $26.58 per hour

Variable overhead rate variance = ($26.58 - $25) * 8,190

= $12,940.20

b) The variable overhead rate variance is the difference between the actual variable manufacturing overhead incurred by Raven and the standard variable overhead that was expected, based on the actual number of hours worked.

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