Biery Corporation makes a product with the following standard costs:

The company produced 4,100 units in April using 5,380 liters of direct material and 2,610 direct labor-hours. During the month, the company purchased 6,000 liters of the direct material at $5.80 per liter. The actual direct labor rate was $19.80 per hour and the actual variable overhead rate was $2.90 per hour.

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 April is:
A)$261 U
B)$246 F
C)$261 F
D)$246 U

Question

Biery Corporation makes a product with the following standard costs:

The company produced 4,100 units in April using 5,380 liters of direct material and 2,610 direct labor-hours. During the month, the company purchased 6,000 liters of the direct material at $5.80 per liter. The actual direct labor rate was $19.80 per hour and the actual variable overhead rate was $2.90 per hour.

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 April is:
A)$261 U 
B)$246 F 
C)$261 F 
D)$246 U

Quizplus · Accepted Answer

The variable overhead rate variance is calculated by multiplying the difference between the actual variable overhead rate and the standard variable overhead rate by the actual direct labor hours. In this case, the actual variable overhead rate is $6.55 per direct labor hour, the standard variable overhead rate is $6.30 per direct labor hour, and the actual direct labor hours are 40 hours. Therefore, the variable overhead rate variance is ($6.55 - $6.30) * 40 = $261 F.

Biery Corporation Makes a Product with the Following Standard Costs