Zacher Corporation makes a product with the following standards for direct labor

Question

Zacher Corporation makes a product with the following standards for direct labor and variable overhead: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct labor 0.3 hours $21.00 per hour $6.30 Variable overhead 0.3 hours $8.50 per hour $2.55 In February the company's budgeted production was 4,100 units, but the actual production was 4,320 units. The company used 1,140 direct labor-hours to produce this output. The actual variable overhead cost was $10,389. The company applies variable overhead on the basis of direct labor-hours.

The variable overhead rate variance for February is:

$736 F $736 U $699 F $699 U

Explanation / Answer

Variable overhead rate variance for February=10389-(1140*8.5)= 699 U Option 4 is correct

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