Juhasz Corporation makes a product with the following standards for direct labor and variable overhead:
In August the company produced 7,900 units using 4,080 direct labor-hours. The actual variable overhead cost was $15,096. The company applies variable overhead on the basis of direct labor-hours.
-The variable overhead rate variance for August is:
A) $1,185 F
B) $1,224 U
C) $1,185 U
D) $1,224 F

Question

Juhasz Corporation makes a product with the following standards for direct labor and variable overhead:
  In August the company produced 7,900 units using 4,080 direct labor-hours. The actual variable overhead cost was $15,096. The company applies variable overhead on the basis of direct labor-hours.
-The variable overhead rate variance for August is:
A) $1,185 F 
B) $1,224 U 
C) $1,185 U 
D) $1,224 F

Quizplus · Accepted Answer

AH × AR = $15,096
Variable overhead rate variance = (AH × AR) − (AH × SR)
= ($15,096) − (4,080 hours × $4.00 per hour)
= $15,096 − $16,320
= $1,224 F

Juhasz Corporation Makes a Product with the Following Standards for Direct