Tharaldson Corporation makes a product with the following standard costs:
Standard Quantity or Hours | Standard Price or Rate | Standard Cost Per Unit | |||||||
Direct materials | 7.0 | ounces | $ | 3.00 | per ounce | $ | 21.00 | ||
Direct labor | 0.3 | hours | $ | 14.00 | per hour | $ | 4.20 | ||
Variable overhead | 0.3 | hours | $ | 9.00 | per hour | $ | 2.70 | ||
The company reported the following results concerning this product in June.
Originally budgeted output | 2,400 | units | |
Actual output | 2,900 | units | |
Raw materials used in production | 22,000 | ounces | |
Purchases of raw materials | 23,100 | ounces | |
Actual direct labor-hours | 550 | hours | |
Actual cost of raw materials purchases | $ | 45,000 | |
Actual direct labor cost | $ | 12,400 | |
Actual variable overhead cost | $ | 3,200 | |
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 efficiency variance for June is:
Answer-The variable overhead efficiency variance for June is =$2880 F.
Explanation-Variable overhead efficiency variance=(Standard hours–Actual working hours)*Standard Rate
= ($870 hours - $550 hours)*$9.00 per hour
= $2880 Favorable
Where- Standard hours = Standard hours per unit*Actual units
=0.3 standard hours per unit*2900 units
= 870 hours
Tharaldson Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price...
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