Majer Corporation makes a product with the following standard costs:

Majer Corporation makes a product with the following standard costs:

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

Originally budgeted output		5,600	units
Actual output		8,400	units
Raw materials used in production		30,700	ounces
Actual direct labor-hours		1,970	hours
Purchases of raw materials		33,100	ounces
Actual price of raw materials	$	82.90	per ounce
Actual direct labor rate	$	92.40	per hour
Actual variable overhead rate	$	1.80	per hour

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 February is:

Garrison 16e Rechecks 2017-10-31

Multiple Choice

• $394 U
• $394 F

  Correct
• $399 F
• $399 U

Explanation

Variable overhead rate variance = AH × (AR − SR)

= 1,970 hours × ($1.80 per hour − $2.00 per hour)

= 1,970 hours × (−$0.20 per hour)

= $394 F

Thanks