Total Variable Overhead Variance Mulliner Company showed the following information for the year: Standard variable overhead rate (SVOR) per direct labor hour $3.50
Standard hours (SH) allowed per unit 3
Actual production in units 20,000
Actual variable overhead costs $220,500
Actual direct labor hours 61,200
Required:
1. Calculate the standard direct labor hours for actual production.
2. Calculate the applied variable overhead.
3. Calculate the total variable overhead variance.

1. The standard direct labor hours for actual production

Standard hours per unit: 3 hours

Actual output: 20,000

Standard labour hours for actual production = 20,000 * 3

=60,000 hours  

2. Applied variable Overhead

Standard hours allowed per unit = 3  

Overhead rate per hour = $3.5

Standard Overhead rate per unit = Standard hours allowed per unit  * OH rate per hour =3 hours * $3.5

=10.5

Actual output= 20000  

Variable OH applied = Actual output * Standard Overhead rate per unit

= 20,000 * $10.5

= $210,000  

3. Total Variable Overhead variance

Actual Oh incurred                                   $220,500  

Std variable Overhead to be allowed     $210,000

Total Variable OH variance                    $10,500 (Unfavourable)

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