Irving Corporation makes a product with the following standards for direct labor

Question

Irving Corporation makes a product with the following standards for direct labor and variable overhead: standard Quantity or Standard Price or Standard Cost Per Unit s 5.20 s 1.24 Rate Direct labor Variable overhead Hours 0.20 hours 0.20 hours $26.00 per hour S 6.20 per hour In November the company's budgeted production was 6,500 units, but the actual production was 6,300 units. The company used 1,550 direct labor-hours to produce this output. The actual variable overhead cost was $8,990. The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for November is: Multiple Choice $620 F $504 F $620 U $504 U

Explanation / Answer

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

                                             = (6.20*1550-8990)

Variable overhead rate variance = 620 F

so answer is a) 620 F

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