Geschke Corporation, which produces commercial safes, has provided the following data: Budgeted production 8,500 safes
Standard machine-hours per safe 9.1 machine-hours
Standard supplies cost $1.70 per machine-hour
Actual production 8,700 safes
Actual machine-hours 79,100 machine-hours
Actual supplies cost $123,642

Supplies cost is an element of variable manufacturing overhead. The variable overhead rate variance for supplies is closest to:

a. $10,947 U
b. $119 U
c. $119 F
d. $10,947 F

Variable manufacturing overhead rate variance= $10,947 favorable

Explanation:

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

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

Standard rate= $1.7 per machine-hout

Actual rate= (123,642/79,100)= $1.563

Standard quantity= (8,700*0.1)= 79,170 hours

Variable manufacturing overhead rate variance= 1.7*79,170 - 123,642

Variable manufacturing overhead rate variance= 134,589 - 123,642

Variable manufacturing overhead rate variance= $10,947 favorable