Jardell Corporation makes a product with the following standards for labor and variable overhead: The company budgeted for production of 6,400 units in June, but actual production was 6,400 units. The company used 3,180 direct labor-hours to produce this output. The actual variable overhead rate was $4.90 per hour. The company applies variable overhead on the basis of direct labor-hours.
-The variable overhead rate variance for July is:
A)$600 F
B)$600 U
C)$548 F
D)$548 U

Question

Jardell Corporation makes a product with the following standards for labor and variable overhead:  The company budgeted for production of 6,400 units in June, but actual production was 6,400 units. The company used 3,180 direct labor-hours to produce this output. The actual variable overhead rate was $4.90 per hour. The company applies variable overhead on the basis of direct labor-hours.
-The variable overhead rate variance for July is:
A)$600 F 
B)$600 U 
C)$548 F 
D)$548 U

Quizplus · Accepted Answer

Variable overhead rate variance = AH(AR - SR)
= 2,740 hours ($5.20 per hour - $5.00 per hour)
= 2,740 hours ($0.20 per hour)= $548 U

Jardell Corporation Makes a Product with the Following Standards for Labor