#36

Cheerios is a brand of cereal manufactured by General Mills in the United States, consisting of pulverized oats. General Mills' management has established the following standards: Direct materials: 2.5 ounces at $20 per ounce Direct labor: 1.4 hours at $12.50 per hour Variable manufacturing overhead: 1.4 hours at 3.50 per hour Variable manufacturing overhead is applied on the basis of standard direct labor-hours. The following data are available for October: - 3,750 units of compound were produced during the month. - There was no beginning direct materials inventory. - Direct materials purchased: 12,000 ounces for $225,000. - The ending direct materials inventory was 2.000 ounces. - Direct labor-hours worked: 5,600 hours at a cost of $67,200. - Variable manufacturing overhead costs incurred amounted to \$18,200. - Variable manufacturing overhead applied to products: $18,375. The variable overhead rate variance for October is: Variable Manufacturing Overhead rate variance =(ARSR)AH AR = actual variable manufacturing overhead rate SR = standard variable manufacturing overhead rate AH= actual hours worked Variable Manufacturing Overhead Efficiency Variance =(AHSH)SR AH= actual hours worked SH= standard hours for the actual level of production SR= standard variable manufacturing overhe Varlable Manufacturing Overhead Efficiency Variance =(AHSH)SR AH= actual hours worked SH = standard hours for the actual level of production SR = standard variable manufacturing overhead rate Multiple Choice $4,375 Unfavorable $3.750 Favorable $1,900 Unfavorable $1,400 Favorable