Hurren Corporation makes a product with the following standard costs: Standard Q

Question

Hurren Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 5.2 grams $6.00 per gram $31.20 Direct labor 0.7 hours $17.00 per hour $11.90 Variable overhead 0.7 hours $6.00 per hour $4.20 The company reported the following results concerning this product in June. Originally budgeted output 5,800 units Actual output 5,700 units Raw materials used in production 28,460 grams Actual direct labor-hours 3,800 hours Purchases of raw materials 32,600 grams Actual price of raw materials purchased $6.10 per gram Actual direct labor rate $17.90 per hour Actual variable overhead rate $5.70 per hour 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:

Explanation / Answer

Particulars Standard Actual Qty Rate amount Qty Rate amount Materials            29,640.00                      6.00         177,840.00            32,600.00                      6.10         198,860.00 Labour              3,990.00               17.0000            67,830.00              3,800.00                    17.90            68,020.00 Overhead              3,990.00                      6.00            23,940.00              3,800.00                  5.7000            21,660.00 Actual output              5,700.00 Materials reqd(5,700*5.2)            29,640.00 Labour hrs reqd(5,700*.7)              3,990.00 variable overhead rate variance VORV = (SR-AR)AH VORV = (6 - 5.70)3,800 VORV = 1,140 F

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