Question

Doogan Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 8.4 grams $ 3.00 per gram Direct labor 0.5 hours $ 30.00 per hour Variable overhead 0.5 hours $ 8.00 per hour The company produced 6,200 units in January using 40,310 grams of direct material and 2,480 direct labor-hours. During the month, the company purchased 45,400 grams of the direct material at $2.70 per gram. The actual direct labor rate was $29.30 per hour and the actual variable overhead rate was $7.80 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

Variable manufacturing overhead rate variance= $496 favorable

Step-by-step explanation:

Giving the following information:

Standard:

Variable overhead 0.5 hours $ 8.00 per hour

The company produced 6,200 units using 2,480 direct labor-hours. The actual variable overhead rate was $7.80 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= (8 - 7.8)*2,480

Variable manufacturing overhead rate variance= $496 favorable