3 TB MC Qu. 10-140 Tharaldson Corporation makes Tharaldson Corporation makes a p

Question

3 TB MC Qu. 10-140 Tharaldson Corporation makes Tharaldson Corporation makes a product with the following standard costs: Standard Quantity or Hours 6.0 ounces 0.3 hours 0.3 hours 10 points Standard or Cost Per Standard Price Unit Direct materials Direct labor Variable overhead Rate $ 3.00 per ounce 11.00 per hour $ 9.00 per hour $18.00 $3.30 $ 2.70 References The company reported the following results concerning this product in June Originally budgeted output Actual output Raw materials used in production Purchases of raw materials Actual direct labor-hours Actual cost of raw materials purchases Actual direct labor cost Actual variable overhead cost 3,600 units 3,200 units 21,000 ounces 22,100 ounces 500 hours 42,308 $ 13,600 $3,800 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 labor efficiency variance for June is: Multiple Choice $5,060 F $6,380 F $6,380 U $5,060 U

Explanation / Answer

Labour efficiency variance = Standard rate *(standard hours for actual output - actual hours)

LabOur efficiency variance = 11*(0.3*3200 - 500)

Labour efficiency variance = 11*(960 - 500)

Labour efficiency variance = 11*(460)

Labour efficiency variance = 5060 F

Therefore the answer is option (a) 5060 F

Variable overhead rate variance = standard rate per hour*actual hours - actual variable overheads

Variable overhead rate variance = (3.50*1830) - (3.2*1830)

Variable overhead rate variance = 6405 - 5856

Variable overhead rate variance = 549 F

Therefore the answer is option (a) 549 F

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