Question 2 Desue Corporation makes a product with the following standards for la

Question

Question 2

Desue Corporation makes a product with the following standards for labor and variable overhead:

The company budgeted for production of 6,500 units in December, but actual production was 6,300 units. The company used 610 direct labor-hours to produce this output. The actual variable overhead rate was $6.40 per hour. The company applies variable overhead on the basis of direct labor-hours.

The variable overhead rate variance for December is:

$378 F

$366 F

$366 U

$378 U

Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct labor 0.1 hours $19.00 per hour $1.90 Variable overhead 0.1 hours $7.00 per hour $0.70

Explanation / Answer

The correct option is option B $366 F

Variable overhead rate variance = actual hours ( standard rate - actual rate)

610($7 - $6.40)= 610 hours * $0.70 = $366 F

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