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makes a product with the following standards for direct labor and variable overhead: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct labor 0.20 hours $ 26.00 per hour $ 5.20 Variable overhead 0.20 hours $ 6.20 per hour $ 1.24 In November the company's budgeted production was 6500 units, but the actual production was 6300 units. The company used 1550 direct labor-hours to produce this output. The actual variable overhead cost was $8990. The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for November is:

Answer :

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Explanation:

Given that;

Direct labor hours used to produce this output = 1,550

Actual variable overhead cost = $8,990

Variable overhead per hour = $6.2

The variable overhead rate variance for July is;

= Direct labor hours used to produce this out put × (Actual variable overhead rate per hour - Variable overhead per hour)

= 1,550 × ($8,990/1,550 - $6.2)

= 1,550 × ($5.8 - $6.2)

= 1,550 × (-$0.4)

= $620 favorable

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