Bulluck Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 3.5 grams $ 1.00 per gram Direct labor 0.7 hours $ 11.00 per hour Variable overhead 0.7 hours $ 2.00 per hour The company reported the following results concerning this product in July. Actual output 3,000 units Raw materials used in production 11,370 grams Actual direct labor-hours 1,910 hours Purchases of raw materials 12,100 grams Actual price of raw materials purchased $ 1.20 per gram Actual direct labor rate $ 11.40 per hour Actual variable overhead rate $ 2.10 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 July is:
Multiple Choice
$191 F
$210 F
$191 U
$210 U
Expert Answer
Variable overhead rate variance = Actual hours*(Actual rate-Standard rate) | |||||||
=1910*(2.1-2)= | 191 | U | |||||
Option 3 is correct | |||||||