The Richie Company Uses a Standard Costing System in Which

Multiple Choice

The Richie Company uses a standard costing system in which variable manufacturing overhead is assigned to production on the basis of the number of machine setups. Data for the month of October include the following:

• Variable manufacturing overhead cost incurred: $42,750
• Total variable manufacturing overhead variance: $5,430 favorable
• Standard machine setups allowed for actual production: 2,920 setups
• Actual machine setups incurred: 2,850 setups
-The variable overhead rate variance is:

A) $4,275 favorable
B) $4,275 unfavorable
C) $1,050 unfavorable
D) $1,050 favorable