Tharaldson Corporation makes a product with the following standard costs:
| Standard Quantity or Hours | Standard Price or Rate | Standard Cost Per Unit | |||||||
| Direct materials | 6.5 | ounces | $ | 2.00 | per ounce | $ | 13.00 | ||
| Direct labor | 0.2 | hours | $ | 23.00 | per hour | $ | 4.60 | ||
| Variable overhead | 0.2 | hours | $ | 6.00 | per hour | $ | 1.20 | ||
The company reported the following results concerning this product in June.
| Originally budgeted output | 2,700 | units | |
| Actual output | 2,800 | units | |
| Raw materials used in production | 19,380 | ounces | |
| Purchases of raw materials | 21,400 | ounces | |
| Actual direct labor-hours | 500 | hours | |
| Actual cost of raw materials purchases | $ | 40,660 | |
| Actual direct labor cost | $ | 12,050 | |
| Actual variable overhead cost | $ | 3,100 | |
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:
|
Variable overhead rate variance = (SR-AR) *alh = (6 - 3100/500)*500 = 100 Unfavorable |
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Tharaldson Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price...