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Tharaldson Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 5.9

Tharaldson Corporation makes a product with the following standard costs:

Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit
Direct materials 5.9 ounces $ 2.00 per ounce $ 11.80
Direct labor 0.4 hours $ 10.00 per hour $ 4.00
Variable overhead 0.4 hours $ 4.00 per hour $ 1.60

The company reported the following results concerning this product in June.

Originally budgeted output 3,700 units
Actual output 3,300 units
Raw materials used in production 21,500 ounces
Purchases of raw materials 22,000 ounces
Actual direct labor-hours 510 hours
Actual cost of raw materials purchases $ 42,400
Actual direct labor cost $ 13,700
Actual variable overhead cost $ 3,750

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

  • $1,722 U

  • $1,722 F

  • $1,710 F

  • $1,710 U

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