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