Valera Corporation makes a product with the following standards for labor and variable overhead: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct labor 0.4 hours $ 21.00 per hour $ 8.40 Variable overhead 0.4 hours $ 6.00 per hour $ 2.40 The company budgeted for production of 5,300 units in July, but actual production was 5,400 units. The company used 2,130 direct labor-hours to produce this output. The actual variable overhead rate was $6.10 per hour. The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for July is:

Question

Business

Kim

2 January, 00:11

Valera Corporation makes a product with the following standards for labor and variable overhead: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct labor 0.4 hours $ 21.00 per hour $ 8.40 Variable overhead 0.4 hours $ 6.00 per hour $ 2.40 The company budgeted for production of 5,300 units in July, but actual production was 5,400 units. The company used 2,130 direct labor-hours to produce this output. The actual variable overhead rate was $6.10 per hour. The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for July is:

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Elliot Ho · Answer 1

213 Unfavorable

Explanation:

Given that,

Direct labor-hours used to produce this output = 2,130

Actual variable overhead rate = $6.10 per hour

Variable overhead per hour = $6.00

The variable overhead rate variance for July:

= Direct labor-hours used to produce this output * (Actual variable overhead rate per hour - Variable overhead per hour)

= 2,130 * ($6.1 - $6)

= 213 Unfavorable