Question

The Koski Company has established standards as follows:

• Direct materials: 3 pounds at $4 per pound = $12 per unit
• Direct labor: 2 hours at $8 per hour = $16 per unit
• Variable overhead: 2 hours at $5 per hour = $10 per unit

Actual production figures for the past year were as follows:

• Units produced 500
• Direct materials used 1,600 pounds
• Direct materials purchased (3,000 pounds) $12,300
• Direct labor cost (950 hours) $7,790
• Variable overhead cost incurred $4,655

1. The materials price variance is:

   		$160 U
   		$6,300 U
   		$300 U
   		$150 U

2. The materials quantity variance is:

   		$400 U
   		$410 F
   		$410 U
   		$6,000 U

3. The labor rate variance is:

   		$210 F
   		$190 F
   		$399 F
   		$190 U

4. The labor efficiency variance is:

   		$400 F
   		$800 F
   		$800 U
   		$500 F

5. The variable overhead rate variance is:

   		$345 F
   		$95 F
   		$655.50 F
   		$345 U

   1. The variable overhead efficiency variance is:

      		$500 F
      		$500 U
      		$245 F
      		$250 F I need the answers for 5 and 6

Answer 1

Answer 5 : Correct Answer : Option B - $ 95 F
Calculate the Variable Overhead Rate Variance
	Variable overhead rate variance = (standard hours * standard rate) - (Actual variable overhead)
				= (950 * 5 ) - (4655)
				= (4750)-(4655)
			=	95	F
Answer 6 : Correct Answer : Option D - $ 250 F
Calculate the Variable Overhead Efficiency Variance
	Variable overhead efficiency variance = (standard hours * standard rate) - (Actual Hours * Standard Rate)
				= (500 * 2 * 5 ) - (950*5)
				= (5000)-(4750)
			=	250	F