In: Accounting
Bulluck Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 3.5 grams $ 1.00 per gram Direct labor 0.7 hours $ 11.00 per hour Variable overhead 0.7 hours $ 2.00 per hour The company reported the following results concerning this product in July. Actual output 3,000 units Raw materials used in production 11,370 grams Actual direct labor-hours 1,910 hours Purchases of raw materials 12,100 grams Actual price of raw materials purchased $ 1.20 per gram Actual direct labor rate $ 11.40 per hour Actual variable overhead rate $ 2.10 per hour The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The variable overhead efficiency variance for July is:
Actual DATA for |
3000 |
units |
|
Quantity (AQ) |
Rate (AR) |
Actual Cost |
|
Direct Material |
11370 |
$ 1.200 |
$ 13,644.00 |
Direct labor |
1910 |
$ 11.40 |
$ 21,774.00 |
Variable Overhead |
1910 |
$ 2.10 |
$ 4,011.00 |
Standard DATA for |
3000 |
units |
|
Quantity (SQ) |
Rate (SR) |
Standard Cost |
|
Direct Material(3.5*3000) |
10500 |
$ 1.00 |
$ 10,500.00 |
Direct labor (0.7*3000) |
2100 |
$ 11.00 |
$ 23,100.00 |
Variable Overhead (0.7*3000) |
2100 |
$ 2.00 |
$ 4,200.00 |
Variable Overhead Efficiency Variance |
||||||
( |
Standard Hours |
- |
Actual Hours |
) |
x |
Standard Rate |
( |
2100 |
- |
1910 |
) |
x |
$ 2.00 |
$ 380 |
||||||
Variance |
$ 380 |
Favorable-F |
Variable overhead efficiency variance is due to change in labor hours used in the production.
Variable Overhead Efficiency variance for july is $380 Favorable.