Question

Kartman Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 7.8 pounds $ 8.30 per pound $ 64.74 Direct labor 0.3 hours $ 37.00 per hour $ 11.10 Variable overhead 0.3 hours $ 5.30 per hour $ 1.59 In June the company's budgeted production was 4,700 units but the actual production was 4,800 units. The company used 23,450 pounds of the direct material and 2,420 direct labor-hours to produce this output. During the month, the company purchased 26,700 pounds of the direct material at a cost of $183,180. The actual direct labor cost was $58,321 and the actual variable overhead cost was $11,861. 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 June is:

Answer 1

Answer:

$965 Unfavorable

Explanation:

The calculation of variable overhead rate variance for June is given below:-

Variable overhead rate variance = Actual variable overhead cost - (direct labor-hours × Variable overhead Standard rate

$11,861 - (2,420 × $5.30)

= $11,861 - $12,826

= $965 Unfavorable

Therefore for computing the variable overhead rate variance for June we simply applied the above formula.