Kibodeaux Corporation makes a product with the following standard costs: Picture
ID: 2416802 • Letter: K
Question
Kibodeaux Corporation makes a product with the following standard costs: Picture The company budgeted for production of 3,300 units in June, but actual production was 3,400 units. The company used 33,240 liters of direct material and 320 direct labor-hours to produce this output. The company purchased 35,900 liters of the direct material at $4.90 per liter. The actual direct labor rate was $22.70 per hour and the actual variable overhead rate was $2.70 per hour.
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:
The variable overhead rate variance for June is:
Inputs Direct matrial Direct labor Variable overhead Standard Quantity or Hours 9.8 liters 0.1 hours 0.1 hours Standard Price or Rate $5.00 per liter $22.00 per hour 3.00 per hour Standard Cost Per Unit $49.00 $2.20 $0.30 ....Explanation / Answer
Variable overhead efficiency variance:
SH = 3,400 units X 0.1 hour per unit = 340 hours
Variable overhead efficiency variance = (AH - SH) SR
= (320 hours - 340 hours) $3 per hour
= (-20 hours) $3 per hour = $60 F
Variable overhead efficiency variance:
SH = 3,400 units X 0.1 hour per unit = 340 hours
Variable overhead efficiency variance = (AH - SH) SR
= (320 hours - 340 hours) $3 per hour
= (-20 hours) $3 per hour = $60 F
= 320 hours ($2.70 per hour - $3.00 per hour)
= 320 hours (-$0.30 per hour) = $96 F
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