Majer Corporation makes a product with the following standard costs: The company

Question

Majer Corporation makes a product with the following standard costs:

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

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 February is:

Garrison 16e Rechecks 2017-10-31

Multiple Choice

$1,710 F

$1,715 F

$1,710 U

$1,715 U

Standard Quantity
or Hours Standard Price or
Rate Standard Cost Per Unit Direct materials 6.3 ounces $ 2.00 per ounce $ 12.60 Direct labor 0.5 hours $ 10.00 per hour $ 5.00 Variable overhead 0.5 hours $ 4.00 per hour $ 2.00

Explanation / Answer

A. $1,710 F

Variable overhead rate variance = AH × (AR ? SR)

= 1,900 hours × ($3.10 per hour ? $4.00 per hour)

= $1,710 F

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