Question 1 Miguez Corporation makes a product with the following standard costs:

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Question 1

Miguez Corporation makes a product with the following standard costs:

The company budgeted for production of 2,600 units in September, but actual production was 2,500 units. The company used 5,440 liters of direct material and 1,680 direct labor-hours to produce this output. The company purchased 5,800 liters of the direct material at $7.20 per liter. The actual direct labor rate was $24.10 per hour and the actual variable overhead rate was $1.90 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 rate variance for September is:

$175 F

$168 U

$168 F

$175 U

Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 2.3 liters $ 7.00 per liter $ 16.10 Direct labor 0.7 hours $ 22.00 per hour $ 15.40 Variable overhead 0.7 hours $ 2.00 per hour $ 1.40 1 points Save Answer Lacrue Inc. has provided the following data concerning one of the products in lts standard cost syostom. Variable manufacturing overhead ia applied to products on the basis or dreet ibhour andard uantity or ours per Unit of Output 22.00 per hour per hour manufacturing overhead The standard hours allowed for the actual output is closest to 1,480 hours 1,580 hours 1,520 hous 1,538 hours

Explanation / Answer

Variable overhead rate variance = 1680*(1.9-2)= 168 F Option 3 is correct

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