Question

Doogan Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 8.3 grams $ 2.90 per gram Direct labor 0.4 hours $ 29.00 per hour Variable overhead 0.4 hours $ 7.90 per hour The company produced 6,100 units in January using 40,210 grams of direct material and 2,470 direct labor-hours. During the month, the company purchased 45,300 grams of the direct material at $2.60 per gram. The actual direct labor rate was $28.30 per hour and the actual variable overhead rate was $7.70 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

Manufacturing overhead rate variance= $494 favorable

Step-by-step explanation:

Giving the following information:

Variable overhead 0.4 hours $ 7.90 per hour

The company produced 6,100 units in January using 2,470 direct labor-hours.

The actual variable overhead rate was $7.70 per hour.

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

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

Manufacturing overhead rate variance= (7.9 - 7.7)*2,470

Manufacturing overhead rate variance= $494 favorable