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Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or...

Corporation makes a product with the following standard costs:

Standard Quantity or Hours Standard Price or Rate
Direct materials 10.4 kilos $ 7.90 per kilo
Direct labor 0.3 hours $ 39.00 per hour
Variable overhead 0.3 hours $ 7.90 per hour

The company reported the following results concerning this product in August.

Actual output 5,100 units
Raw materials used in production 30,930 kilos
Purchases of raw materials 33,500 kilos
Actual direct labor-hours 1,120 hours
Actual cost of raw materials purchases $ 214,920
Actual direct labor cost $ 24,636
Actual variable overhead cost $ 9,440

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 rate variance for August is:

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Answer-------------

Variable Overhead Rate Variance $                 592.00 Unfavourable-U

Working

Actual DATA for 5100 Units
Quantity (AQ) Rate (AR) Actual Cost
Variable Overhead 1120 $            8.43 $            9,440.00

.

Variable Overhead Rate Variance
( Standard Rate - Actual Rate ) x Actual Labor Hours
( $                    7.90 - $                        8.43 ) x 1120
$             (592.00)
Variance $                   592.00 Unfavourable-U

ekkarill92 answered 1 year ago
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