Doogan Corporation makes a product with the following standard Standard Quantity or Hours Standard Price or Rate $3.90 per gram $39.00 per hour $8.90 per hour Direct materials 9.3 grams Direct labor 0.3 hours Variable overhead 0.3 hours The company produced 7,100 units in January using 41,210 grams of direct material and 2,570 direct labor-hours. During the month, the company purchased 46,300 grams of the direct material at $3.60 per gram. The actual direct labor rate was $38.30 per hour and the actual variable overhead rate was $8.70 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 January is: $426 Favorable O $426 Unfavorable $514 Unfavorable $514 Favorable MacBook Air
Doogan Corporation makes a product with the following standard Standard Quantity or Hours Standard Price or Rate $3.90 per gram $39.00 per hour $8.90 per hour Direct materials 9.3 grams Direct labor 0.3 hours Variable overhead 0.3 hours The company produced 7,100 units in January using 41,210 grams of direct material and 2,570 direct labor-hours. During the month, the company purchased 46,300 grams of the direct material at $3.60 per gram. The actual direct labor rate was $38.30 per hour and the actual variable overhead rate was $8.70 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 January is: $426 Favorable O $426 Unfavorable $514 Unfavorable $514 Favorable MacBook Air
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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:Variable overhead 0.3 hours
$8.90 per hour
The company produced 7,100 units in January using 41,210 grams of direct material and 2,570 direct labor-hours. During the
month, the company purchased 46,300 grams of the direct material at $3.60 per gram. The actual direct labor rate was $38.30
per hour and the actual variable overhead rate was $8.70 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 January is:
O $426 Favorable
O $426 Unfavorable
O $514 Unfavorable
O $514 Favorable
Transcribed Image Text:Doogan Corporation makes a product with the following standard costs:
Standard Quantity or Hours Standard Price or Rate
$3.90 per gram
$39.00 per hour
$8.90 per hour
Direct materials 9.3 grams
Direct labor
0.3 hours
Variable overhead 0.3 hours
The company produced 7,100 units in January using 41,210 grams of direct material and 2,570 direct labor-hours. During the
month, the company purchased 46,300 grams of the direct material at $3.60 per gram. The actual direct labor rate was $38.30
per hour and the actual variable overhead rate was $8.70 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 January is:
$426 Favorable
O $426 Unfavorable
$514 Unfavorable
$514 Favorable
MacBook Air
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