Tharaldson Corporation makes a product with the following standard costs: Standa

Question

Tharaldson Corporation makes a product with the following standard costs: Standard Standard Quantity or Standard Price or Cost Per Rate Unit Direct materials Direct labor Variable overhead Hours 6.5 ounces 0.2 hours 0.2 hours 2.00 per ounce $13.00 4.60 $ 1.20 $23.00 per hour $ 6.00 per hour 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 Actualvariable overhead cost 2,700 units 2,800 units 19,380 ounces 21,400 ounces 500 hours 40,660 $12,050 $ 3,100 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

Variable overhead efficiency variance = (Standard hour-actual hour)Standard rate

= (2800*.20-500)*6

Variable overhead efficiency variance = 360 Favorable

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