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Doogan Corporation makes a product with the following standard costs

Doogan Corporation makes a product with the following standard costs: 


Standard Quantity or HoursStandard Price or Rate
Direct materials8.7 grams$3.30 per gram
Direct labor0.5 hours$33.00 per hour
Variable overhead0.5 hours$8.30 per hour


The company produced 6,500 units in January using 40,610 grams of direct material and 2,510 direct labor-hours. During the month, the company purchased 45,700 grams of the direct material at $3.00 per gram. The actual direct labor rate was $32.30 per hour and the actual variable overhead rate was $8.10 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 rate variance for January is:

Solutions

Expert Solution

Variable overhead rate variance = (Standard rate-actual rate)actual hours

= (8.30-8.10)*2510

Variable overhead rate variance = 502 Favorable

ekkarill92 answered 2 years ago
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