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		7.2	ounces	$	2.00	per ounce	$	14.40
Direct labor		0.3	hours	$	16.00	per hour	$	4.80
Variable overhead		0.3	hours	$	4.00	per hour	$	1.20

The company reported the following results concerning this product in June.

Originally budgeted output		2,600	units
Actual output		2,200	units
Raw materials used in production		18,000	ounces
Purchases of raw materials		21,500	ounces
Actual direct labor-hours		500	hours
Actual cost of raw materials purchases	$	42,000
Actual direct labor cost	$	12,600
Actual variable overhead cost	$	3,100

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:

Answer 1

Actual DATA for		2200	Units
	Quantity (AQ)	Rate (AR)	Actual Cost
Variable Overhead	500	$   6.20	$         3,100.00

Standard DATA for		2200	Units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Variable Overhead	( 0.3 Hours x 2200 Units)=660 Hours	$ 4.00	$    2,640.00

Variable Overhead Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$ 4.00	-	$ 6.20	)	x	500
	$ (1,100.00)
	Variance		$   1,100.00			Unfavorable-U

Variable Overhead Rate Variance=$1100 U