Landram Corporation makes a product with the following standard costs: In March the company produced 4,700 units using 10,230 kilos of the direct material and 2,210 direct labor-hours. During the month, the company purchased 10,800 kilos of the direct material at a cost of $76,680. The actual direct labor cost was $38,233 and the actual variable overhead cost was $11,934.

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 March is:
A)$884 U
B)$884 F
C)$940 U
D)$940 F

Question

Landram Corporation makes a product with the following standard costs:

In March the company produced 4,700 units using 10,230 kilos of the direct material and 2,210 direct labor-hours. During the month, the company purchased 10,800 kilos of the direct material at a cost of $76,680. The actual direct labor cost was $38,233 and the actual variable overhead cost was $11,934.

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 March is:

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 March is:
A)$884 U 
B)$884 F 
C)$940 U 
D)$940 F

Quizplus · Accepted Answer

Variable overhead rate variance = (AH F1F1F1S1F1F1F10 AR)- (AH F1F1F1S1F1F1F10 SR)
= $11,934 - (2,210 hours F1F1F1S1F1F1F10 $5.00 per hour)
= $11,934 - $11,050 = $884 U

Landram Corporation Makes a Product with the Following Standard Costs