Hanson Inc. has the following variable manufacturing overhead standard to manufacture one Zippy: 1.5 standard hours per Zippy at $3.00 per direct labor hour
Last week, 1,550 hours were worked to make 1,000 Zippies, and $5,115 was spent for variable manufacturing overhead.
1. Hanson’s rate variance (VMRV) for variable manufacturing overhead for the week was:.
a. $465 unfavorable.
b. $400 favorable.
c. $335 unfavorable.
d. $300 favorable
2. Hanson’s efficiency variance (VMEV) for variable manufacturing overhead for the week was:.
a. $435 unfavorable.
b. $435 favorable.
c. $150 unfavorable.
d. $150 favorable.

Variable manufacturing overhead rate variance= $465 unfavorable

Variable overhead efficiency variance= $150 unfavorable

Explanation:

Giving the following information:

Standard:

1.5 standard hours per Zippy at $3.00 per direct labor hour

Actual:

1,550 hours to make

1,000 Zippies

$5,115 was spent

To calculate the variable overhead rate variance, we need to use the following formula:

Variable manufacturing overhead rate variance= (standard rate - actual rate)* actual quantity

Actual rate= 5,115/1,550= $3.3

Variable manufacturing overhead rate variance=  (3 - 3.3)*1,550

Variable manufacturing overhead rate variance= $465 unfavorable

To calculate the variable overhead efficiency variance, we need to use the following formula:

Variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate

Variable overhead efficiency variance= (1.5*1,000 - 1,550)*3

Variable overhead efficiency variance= $150 unfavorable

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