Hudson Company’s variable overhead is applied on the basis of direct labor hours. The standard cost card specifies 3 direct labor hours per unit of its product. The standard variable overhead rate is $5 per direct labor hour. Last quarter, Hudson actually produced 10,000 units of product. The company’s accounting records show its variable overhead efficiency variance was $5,000 Unfavorable and variable overhead rate variance was $12,000 Favorable. What was Hudson’s actual variable overhead cost last quarter?
$143,000 $157,000 $167,000 $133,000
Expert Answer
Actual variable overhead cost: $143,000
SH = 10000 units x 3 = 30000 direct labor hours
SR = $5
Variable
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