Doogan Corporation makes a product with the following standard costs: Direct materials. Direct labor Variable overhead Standard Quantity or Hours 7.6 grams 0.6 hours 0.6 hours The variable overhead rate variance for January is: Standard Price or Rate $ 2.20 per gram $ 22.00 per hour $ 7.20 per hour The company produced 5,400 units in January using 39,510 grams of direct material and 2,400 direct labor-hours. During the month, the company purchased 44,600 grams of the direct material at $1.90 per gram. The actual direct labor rate was $21.30 per hour and the actual variable overhead rate was $7.00 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.
Doogan Corporation makes a product with the following standard costs: Direct materials. Direct labor Variable overhead Standard Quantity or Hours 7.6 grams 0.6 hours 0.6 hours The variable overhead rate variance for January is: Standard Price or Rate $ 2.20 per gram $ 22.00 per hour $ 7.20 per hour The company produced 5,400 units in January using 39,510 grams of direct material and 2,400 direct labor-hours. During the month, the company purchased 44,600 grams of the direct material at $1.90 per gram. The actual direct labor rate was $21.30 per hour and the actual variable overhead rate was $7.00 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.
Chapter1: Financial Statements And Business Decisions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Doogan Corporation makes a product with the following standard costs:
Direct materials
Direct labor
Variable overhead
Standard
Quantity or
Hours
7.6 grams
0.6 hours
0.6 hours
The variable overhead rate variance for January is:
Standard Price or Rate
$ 2.20 per gram
$ 22.00 per hour
$ 7.20 per hour
The company produced 5,400 units in January using 39,510 grams of direct material and 2,400 direct labor-hours. During the month, the company
purchased 44,600 grams of the direct material at $1.90 per gram. The actual direct labor rate was $21.30 per hour and the actual variable overhead rate
was $7.00 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.
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