Epley Corporation makes a product with the following standard costs: In July the company produced 3, 300 units using 12, 240 pounds of the direct material and 2, 760 direct labor-hours.During the month, the company purchased 13, 000 pounds of the direct material at a cost of $35, 100.The actual direct labor cost was $51, 612 and the actual variable overhead cost was $20, 148. 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 July is:

Question

Epley Corporation makes a product with the following standard costs:  In July the company produced 3, 300 units using 12, 240 pounds of the direct material and 2, 760 direct labor-hours.During the month, the company purchased 13, 000 pounds of the direct material at a cost of $35, 100.The actual direct labor cost was $51, 612 and the actual variable overhead cost was $20, 148. 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 July is:

Quizplus · Accepted Answer

Variable overhead rate variance = (AH × AR)- (AH × SR)
= ($20, 148)- (2, 760 hours × $8.00 per hour)
= $20, 148 - $22, 080
= $1, 932 F

Epley Corporation Makes a Product with the Following Standard Costs