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Kartman Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 6.8

Kartman Corporation makes a product with the following standard costs:

Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit
Direct materials 6.8 pounds $ 7.30 per pound $ 49.64
Direct labor 0.5 hours $27.00 per hour $ 13.50
Variable overhead 0.5 hours $4.30 per hour $ 2.15

In June the company's budgeted production was 3,700 units but the actual production was 3,800 units. The company used 22,450 pounds of the direct material and 2,320 direct labor-hours to produce this output. During the month, the company purchased 25,700 pounds of the direct material at a cost of $173,180. The actual direct labor cost was $57,321 and the actual variable overhead cost was $9,631.

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 June is:

Multiple Choice

  • $283 Unfavorable

  • $283 Favorable

  • $345 Favorable

  • $345 Unfavorable

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