Question
Milar Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 7.7 pounds $ 4.00 per
Milar Corporation makes a product with the following standard costs:
Standard Quantity or Hours | Standard Price or Rate | ||||||||||
Direct materials | 7.7 | pounds | $ | 4.00 | per pound | ||||||
Direct labor | 0.1 | hours | $ | 20.00 | per hour | ||||||
Variable overhead | 0.1 | hours | $ | 4.00 | per hour | ||||||
In January the company produced 2,000 units using 16,060 pounds of the direct material and 210 direct labor-hours. During the month, the company purchased 16,900 pounds of the direct material at a cost of $65,910. The actual direct labor cost was $4,473 and the actual variable overhead cost was $756.
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 efficiency variance for January is:
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