Tharaldson Corporation makes a product with the following standard costs: Standa
ID: 2514047 • Letter: T
Question
Tharaldson Corporation makes a product with the following standard costs: Standard Quantity or Hours 6.2 ounces 0.5 hours 0.5 hours Standard Standard Price or Cost Per Rate $3.00 per ounce $ 10.00 per hour $7.00 per hour Unit Direct materials Direct labor Variable overhead $18.60 $ 5.00 3.50 The company reported the following results concerning this product in June Originally budgeted output Actual output Raw materials used in production Purchases of raw materials Actual direct labor-hours Actual cost of raw materials purchases Actual direct labor cost Actual variable overhead cost 3,400 units 2,800 units 21,200 ounces 22,300 ounces 480 hours $ 42,100 13,400 $ 3,700 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:Explanation / Answer
Answer)
Variable overhead efficiency variance:
(Std.hours for actual output-actual hours)std. Rate
(2400 units×0.5 hours-480hours)×$7
(1400hours-480hours)×$7
(920hours)×$7=$6440 favourable
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