Calculating the variable overhead variance Cheney Company established a predetermined variable overhead cost rate at $21.00 per direct labor hour. The actual variable overhead cost rate was $19.20 per hour. The planned level of labor activity was 76,000 hours of labor. The company actually used 80,000 hours of labor.
Required
a. Determine the total flexible budget variable overhead cost variance.
b. Like many companies, Cheney has decided not to separate the total variable overhead cost vari- ance into price and usage components. Explain why Cheney made this choice.
