Question

TB MC Qu. 10-149 (Algo) ABC Corporation makes a product ... ABC Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 7.7 grams $ 2.30 per gram Direct labor 0.5 hours $ 23.00 per hour Variable overhead 0.5 hours $ 7.30 per hour The company produced 5,500 units in January using 39,610 grams of direct material and 2,410 direct labor-hours. During the month, the company purchased 44,700 grams of the direct material at $2.00 per gram. The actual direct labor rate was $22.30 per hour and the actual variable overhead rate was $7.10 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:

Answer 1

Direct labor rate variance= $482 favorable

Step-by-step explanation:

Giving the following information:

Variable overhead 0.5 hours $ 7.30 per hour

Actual direct labor hours= 2,410

The actual variable overhead rate was $7.10 per hour.

To calculate the variable overhead rate variance, we need to use the following formula:

Variable manufacturing overhead rate variance= (standard rate - actual rate)* actual quantity

Variable manufacturing overhead rate variance= (7.3 - 7.1)*2,410

Variable manufacturing overhead rate variance= $482 favorable