7. If variable manufacturing overhead is applied on the basis of direct labor-ho

Question

7. If variable manufacturing overhead is applied on the basis of direct labor-hours and the variable overhead rate variance is favorable, then: A) the actual variable overhead rate exceeded the standard rate. B) the standard variable overhead rate exceeded the actual rate. C) the actual direct labor-hours exceeded the standard direct labor-hours allowed for the actual output D) the standard direct labor-hours allowed for the actual output exceeded the actual hours. 12. The following materials standards have been established for a particular product 5.3 meters Standard quantity per unit of output Standard price.. .$17.20 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased 8,100 meters Actual cost of materials purchased.$141,345 Actual materials used in production. 7,600 meters 1,400 units Actual output. What is the materials price variance for the month? A) $3,141 U B) $2,025 U C) $8,600 U D) $8,725 U of 6,850 kilograms of a raw material was purchased at a total cost of $21,920. The materials price variance was $1,370 favorable. The standard price per kilogram for the raw material must be A) $0.20 B) $3.00 C) $3.20 D) $3.40

Explanation / Answer

7.

variable overhead rate variance=Actual overhead costs-(actual hours*Standard rate)

Given the variable overhead rate variance is favorable that means the actual overhead rate is less than the standard overhead rate.

Hence the correct option is B.

12

Material price variance=Actual cost of material purchased-(Actual Material purchased*Standard price)

=$141,345-(8,100*$17.2)

=$2,025 unfavorable

Hence the correct option is B

13

Standard price=(Actual cost+favorable price variance)/Actual raw material

=($21,920+$1,370)/6,850

=$3.4

Hence the correct option is D)$3.40

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