Question 2

Desue 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	0.1 hours	$19.00 per hour	$1.90
Variable overhead	0.1 hours	$7.00 per hour	$0.70

The company budgeted for production of 6,500 units in December, but actual production was 6,300 units. The company used 610 direct labor-hours to produce this output. The actual variable overhead rate was $6.40 per hour. The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for December is:

		$378 F
		$366 F
		$366 U
		$378 U