Question

Irving Corporation makes a product with the following standards for direct labor and variable overhead: Standard Quantity or HoursStandard Price or RateStandard Cost Per Unit Direct labor 0.20hours$33.00per hour$6.60 Variable overhead 0.20hours$6.90per hour$1.38 In November the company's budgeted production was 7,200 units, but the actual production was 7,000 units. The company used 1,520 direct labor-hours to produce this output. The actual variable overhead cost was $9,880. The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for November is:

Answer 1

Answer:

Variable overheads rate variance = $608 favorable

Explanation:

The variable overhead rate variance is the difference between the standard cost of the actual labour hours  and the actual variable overhead expenditure

                                                                                         $

1,520 hours should have cost (1,520× $6.90)              10,488

But did cost                                                                     9,880

Rate variance                                                                    608 Favorable

Variable overheads rate variance = $608 favorable