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In: Accounting

Vermeillen Corporation uses a standard costing system in which variable manufacturing overhead is assigned to production...

Vermeillen Corporation uses a standard costing system in which variable manufacturing overhead is assigned to production on the basis of the number of machine setups. The following data pertain to one month's operations:

  • Variable manufacturing overhead cost incurred: $70,000
  • Total variable manufacturing overhead variance: $4,550 Favorable
  • Standard machine setups allowed for actual production: 3,550
  • Actual machine setups incurred: 3,500

The standard variable overhead rate per machine setup is:

Multiple Choice

  • $18.44

  • $21.30

  • $21.00

  • $20.00

Solutions

Expert Solution

Answer :- $18.44

Assume Variable overhead = X

variable manufacturing overhead variance = standard variable overhead cost - Actual variable overheads
$4,550                                                                          =   X         -   $70,000
X                                                                                     = $65,450
standard variable overhead rate per machine setup = (standard variable overhead / standard machine setups)
                                                                                                                       = $65,450    / 3,550
                                                                                                                       = $18.44

ekkarill92 answered 1 year ago
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