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Chilton allocates variable manufacturing overhead costs on the basis of machine hours. Chilton budgeted .5 machine hours per lamp and allocates overhead at a rate of $1.80 per machine hour. Last year Chilton manufactured 23,000 lamps, used 13,800 machine hours and incurred actual overhead costs of $15,180.
difference between the actual variable overhead cost per unit of the cost allocation base and the budgeted variable overhead cost per unit of the cost allocation base multiplied by the actual quantity of variable overhead cost allocation base used. denominator level variance.