The following information relating to a company's overhead costs is available. col1 = actual total variable overhead, actual total fixed overhead, budgeted variable overhead rate per machine hour, budgeted total fixed overhead, budgeted machine hours allowed for actual outputcol2 = $ 73,000, $ 17,000, $ 2.50, $ 15,000, 30,000 based on this information, the total variable overhead variance is: a) $2,000 favorable.
b) $6,000 favorable.
c) $2,000 unfavorable.
d) $6,000 unfavorable.
e) $1,000 favorable.

A) $2,000 favorable

Explanation:

Actual total variable overhead = $ 73,000

Actual total fixed overhead = $ 17,000

Budgeted variable overhead rate per machine hour = $ 2.50

Budgeted total fixed overhead = $ 15,000

Budgeted machine hours allowed for actual output = 30,000

Budgeted variable overhead = $ 2.50 x 30,000 = $ 75,000

Variable overhead variance = Budgeted variable overhead - Actual total variable overhead

Variable overhead variance = $ 75,000 - $ 73,000 = $ 2,000

Since the actual value is under the budgeted value, the variable overhead variance is $2,000 favorable.

answer; normative economics;