Metz Corporation's Variable Overhead Is Applied on the Basis of Direct

question 89

Essay

Metz Corporation's variable overhead is applied on the basis of direct labor-hours. The standard cost card for product M70T specifies 7.7 direct labor-hours per unit of M70T. The standard variable overhead rate is $6.30 per direct labor-hour. During the most recent month, 400 units of product M70T were made and 3,000 direct labor-hours were worked.
The actual variable overhead incurred was $18,000.
Required:
a. What was the variable overhead rate variance for the month?
b. What was the variable overhead efficiency variance for the month?

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Definitions:

Growth Capital

Capital invested in a company to accelerate its growth without significantly changing its control structure, usually in the form of equity investment.

Equity Preservation

Strategies or measures taken to maintain or protect the value of an investor's ownership stake in a company.

Venture Capitalist

An investor who provides capital to startup companies and small businesses with perceived long-term growth potential in exchange for equity, or ownership stake.

Potential Venture

A business idea or project that has the possibility of being developed into a successful commercial enterprise.