Desue Corporation makes a product with the following standards for labor and variable overhead: The company budgeted for production of 6, 500 units in December, but actual production was 6, 300 units.The company used 610 direct labor-hours to produce this output.The actual variable overhead rate was $6.40 per hour.The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for December is:

Question

Desue Corporation makes a product with the following standards for labor and variable overhead:  The company budgeted for production of 6, 500 units in December, but actual production was 6, 300 units.The company used 610 direct labor-hours to produce this output.The actual variable overhead rate was $6.40 per hour.The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for December is:

Quizplus · Accepted Answer

Variable overhead rate variance = AH × (AR - SR)
= 610 hours × ($6.40 per hour - $7.00 per hour)
= 610 hours × (-$0.60 per hour)
= $366 F

Desue Corporation Makes a Product with the Following Standards for Labor