Miguez Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 2.6 liters $ 7.30 per liter $ 18.98 Direct labor 0.5 hours $ 25.00 per hour $ 12.50 Variable overhead 0.5 hours $ 2.30 per hour $ 1.15 The company budgeted for production of 2,900 units in September, but actual production was 2,800 units. The company used 5,740 liters of direct material and 1,710 direct labor-hours to produce this output. The company purchased 6,100 liters of the direct material at $7.50 per liter. The actual direct labor rate was $27.10 per hour and the actual variable overhead rate was $2.20 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 September is: Multiple Choice

a. $171 F

b. $140 U

c. $140 F

d. $171 U

Question

Mila Gentry

Business

6 December, 11:11

Miguez Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 2.6 liters $ 7.30 per liter $ 18.98 Direct labor 0.5 hours $ 25.00 per hour $ 12.50 Variable overhead 0.5 hours $ 2.30 per hour $ 1.15 The company budgeted for production of 2,900 units in September, but actual production was 2,800 units. The company used 5,740 liters of direct material and 1,710 direct labor-hours to produce this output. The company purchased 6,100 liters of the direct material at $7.50 per liter. The actual direct labor rate was $27.10 per hour and the actual variable overhead rate was $2.20 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 September is: Multiple Choice

a. $171 F

b. $140 U

c. $140 F

d. $171 U

+4

Answers (1)

Know the Answer?

Glenn Valentine · Answer 1

Variable overhead rate variance

= (Standard variable overhead rate - Actual variable overhead rate) x Actual hours worked

= ($2.30 - $2.20) x 1,710 hours

= $171 (F)

Explanation:

Variable overhead rate variance is the difference standard variable overhead rate and actual variable overhead rate multiplied by actual hours worked.