Viger Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: Budgeted level of activity 9,300 MHs Actual level of activity 9,500 MHs Standard variable manufacturing overhead rate $ 8.00 per MH Actual total variable manufacturing overhead $ 73,320 What was the variable overhead rate variance for the month?

Manufacturing overhead rate variance= $2,600 favorable

Explanation:

Giving the following information:

Budgeted level of activity 9,300 MHs

Actual level of activity 9,500

MHs Standard variable manufacturing overhead rate $ 8.00 per MH

Actual total variable manufacturing overhead $ 73,320

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

Manufacturing overhead rate variance= (standard rate - actual rate)* actual quantity

Actual rate= 73,320/9,500= $7.72 per machine hour

Manufacturing overhead rate variance= (8 - 7.72)*9,500

Manufacturing overhead rate variance= $2,600 favorable