The Chilton Corporation Specializes in Manufacturing One Type of Desk

Multiple Choice

The Chilton Corporation specializes in manufacturing one type of desk lamp. Chilton allocates variable manufacturing overhead costs on the basis of machine hours. Chilton budgeted 0.5 machine hours per lamp and allocates overhead at a rate of $1.70 per machine hour. Last year Chilton manufactured 20,000 lamps, used 160,000 machine hours and incurred actual overhead costs of $192,000. What was Chilton's variable manufacturing overhead rate variance last year?

A) $255,000 favorable
B) $255,000 unfavorable
C) $80,000 favorable
D) $80,000 unfavorable