Oddo Corporation makes a product with the following standard costs: Direct mater

Question

Oddo Corporation makes a product with the following standard costs: Direct materials Direct labor Varlable overhead Standard Quantity Standard Price or Standard Cost Rate $7.20 per ounce $18.00 per hour $6.00 per hour or Hours 4.0 ounces 0.7 hours 0.7 hours Per Unit $28.80 $12.60 $4.20 The company reported the following results concerning this product in December Originally budgeted output4,420 units Actual output Raw materials used in production17100 ounces 4,220 units 3,174 hours Actual direct labor-hours Purchases of raw materials Actual price of raw materials Actual direct labor rate Actual varlable overhead rate 18,800 ounces $700 per ounce $6.20 per hour The company applies vartiable overhead on the basis of direct labor-hours. The direct materials purchases varlance is computed when the materials are purchased The variable overhead efficiency vartance for December is: O $1.364 U O $1,320 F O $1.320 u O $1,364 fF

Explanation / Answer

ANSWER:   $ 1320 (U) VOH Efficiency Variance= (Std. Labor hrs. allowed for actual production-Actual labor hrs.)*Std. VOH Rate ((4220*0.7)-3174)*6= -1320 U VOH Rate Variance= (Std. VOH rate-Actual VOH rate)/hr.*Actual hrs. (6-6.2)*3174 -634.8 U Total VOH Cost Variance (Total Std. cost for actual output)-(Actual cost) (4220*0.7*6)-(3174*6.2) -1954.8 U Verification: ie. VOH cost variance= VOH Eff. V+VOH Rate V -1954.8=-1320-634.8

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