Asked by shaianne roache on Jun 14, 2024
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Brummer Corporation makes a product whose variable overhead standards are based on direct labor-hours. The quantity standard is 0.1 hours per unit. The variable overhead rate standard is $8.00 per hour. In January the company produced 8,700 units using 910 direct labor-hours. The actual variable overhead rate was $7.90 per hour.The variable overhead rate variance for January is:
A) $91 Favorable
B) $87 Favorable
C) $91 Unfavorable
D) $87 Unfavorable
Variable Overhead Rate Variance
The difference between the actual variable overhead incurred and the standard cost allocated, based on the actual activity level.
Variable Overhead Standards
The predetermined costs associated with variable overheads that are expected to be incurred under normal operating conditions.
Direct Labor-hours
The total hours worked directly on manufacturing a product or providing a service, used as a basis for allocating labor costs in product costing.
- Acquire knowledge on computing variations in variable overhead rates.
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Learning Objectives
- Acquire knowledge on computing variations in variable overhead rates.
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