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 8.1 pounds $ 8.60 per pound $ 69.66 Direct labor 0.4 hours $ 40.00 per hour $ 16.00 Variable overhead 0.4 hours $ 5.60 per hour $ 2.24 In June the company's budgeted production was 5,000 units but the actual production was 5,100 units. The company used 23,750 pounds of the direct material and 2,450 direct labor-hours to produce this output. During the month, the company purchased 27,000 pounds of the direct material at a cost of $186,180. The actual direct labor cost was $58,621 and the actual variable overhead cost was $13,231. 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

Manufacturing overhead rate variance= $490 favorable

Step-by-step explanation:

Giving the following information:

Variable overhead:

Standard Quantity= 0.4 hours

Standard rate= $5.6 per hour

Budgeted production= 5,000 units

Actual production= 5,100 units

The company used 2,450 direct labor-hours.

The actual variable overhead cost was $13,231.

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

Manufacturing overhead rate variance= (standard rate - actual rate)* actual quantity

Actual rate= 13,231/2,450= $5.4

Manufacturing overhead rate variance= (5.6 - 5.4)*2,450

Manufacturing overhead rate variance= $490 favorable