Standard Quantity or Hours 92 grams 93 hours 03 hours Standa

Standard Quantity or Hours 9.2 grams 9.3 hours 0.3 hours Standard Price or Rate Direct materials Direct labor Variable overhead s3.88 per gram $38.00 per hour 8.80 per hour The company produced 7,000 units in January using 41110 grams of direct material and 2,560 direct labor-hours. During the month, the company purchased 46,200 grams of the direct material at $3.50 per gram. The actual direct labor rate was $37.30 per hour and the actual variable overhead rate was $8.60 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 January is

Solution

Variable O/H Rate Variance = (SR – AR) * Actual Hrs

SR = $8.80/hr

AR = $8.60/hr

Actual Hrs = 2560 Hrs

=(8.80 – 8.60) * 2560 = 512 (F)