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

Question

Tharaldson Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 6.7 ounces $ 3.00 per ounce $ 20.10 Direct labor 0.4 hours $ 11.00 per hour $ 4.40 Variable overhead 0.4 hours $ 6.00 per hour $ 2.40 The company reported the following results concerning this product in June. Originally budgeted output 2,100 units Actual output 2,600 units Raw materials used in production 19,500 ounces Purchases of raw materials 20,000 ounces Actual direct labor-hours 520 hours Actual cost of raw materials purchases $ 41,000 Actual direct labor cost $ 12,100 Actual variable overhead cost $ 3,300 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 rate variance for June is:

Explanation / Answer

Variable overhead rate variance for June=3300-(520*6)= $180 Unfavorable

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