Total Actual Variable Overhead Cost Accounting Need Help

Question

Young Corporation has the following overhead budget for the month of October : 

Budgeted Production : 20,000 units

Budgeted Machine Hours : 6,000

Budgeted Direct Labor Hours : 8,000

 

Budgeted variable manufacturing overhead costs :

Supplies : $24,000

Utilities : $48,000

 

Budgeted fixed manufacturing overhead costs :

Supervision : $19,500

Insurance : $3,800

Depreciation : $8,700

 

Young employs a standard costing system and applies the variable overhead costs based on the standard machine hours and the fixed overhead on the standard labor hours. At the end of October, the company finds its variable and fixed overhead accounts under - or over- applied by the following amounts :

Actual Production in October : 22,000 units

Variable Manufacturing Overhead : $1,000 underapplied

Fixed Manufacturing Overhead : $3,000 overapplied

 

Question: Determine the total actual variable overhead cost (choose the closest answer)

 

A) 66,833 B) 72,000 C) 79,200 D) 80,200 E) 77,200

 

Answer was D) but I need help with steps as to how and why.

Answer 1

Actual Variable Overhead−Applied Variable Overhead=Variable Overhead Variance

Since the Variable Manufacturing Overhead is $1,000 underapplied, it means that the Actual Variable Overhead was greater than the Applied Variable Overhead by $1,000.

1. Actual VOH−Applied VOH=Underapplied VOH
2. Actual VOH−$79,200=$1,000
3. Actual VOH=$79,200+$1,000=$80,200