1- Ortman Corporation makes a product with the following standard costs: The com
ID: 2591951 • Letter: 1
Question
1- Ortman Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in May:
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 May is:
a- $498 F
b- $498 U
c- $495 F
d- $495 U
2- Gilder Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in June:
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 materials price variance for June is:
a- $11,904 F
b- $11,904 U
c- $11,674 U
d- $11,674 F
My answer was 11904 U but it was incorrect.
Standard Quantity or Hours Standard Price or Rate Direct materials 6.3 liters $8.00 per liter Direct labor 0.8 hours $13.00 per hour Variable overhead 0.8 hours $1.00 per hourExplanation / Answer
1. Variable overhead rate variance = (Standard rate-actual rate)actual hours
= (1-.50)990
Variable overhead rate variance = 495 Favourable
2. Material price variance =(Standard price-actual price)actual quantity
= (13*29768-375080)
Material price variance = 11904 F
so answer is a) $11904 F
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