The Wright Company has a standard costing system. The following data are availab

Question

The Wright Company has a standard costing system. The following data are available for September: The actual price per pound of direct materials purchased in September is: $6.87 $7.00 $7.10 $7.13 Oddo Corporation makes a product with the following standard costs: The company reported the following results concerning this product in November. 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 November is: $1,504 F $1,370 U $1,504 U $1,370 F

Explanation / Answer

Actual Price = [(Standard Price * Actual Quantity) + Material Price Variance] / Actual Quantity
                      = [($7 * 40,000) + $4,000] / 40,000 = $7.1

Variable overhead rate variance = AH(AR SR)
= 7,980 hours [($14456/7,980)per hour $2.00 per hour]
= 7,980 hours ($0. -0.1884711779448622 per hour) = $1,504 F

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