variable overhead rate variance
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter9: Standard Costing: A Functional-based Control Approach
Section: Chapter Questions
Problem 30P: Algers Company produces dry fertilizer. At the beginning of the year, Algers had the following...
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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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![$191 F
$210 F
$210 U
$191 U](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc525a2a0-4c52-4545-8847-068adfbbdddc%2Faa3249cd-db85-4217-ae6b-4279bc89c8c6%2Fbfkulhi_processed.png&w=3840&q=75)
Transcribed Image Text:$191 F
$210 F
$210 U
$191 U
![Bulluck Corporation makes a product with the following standard costs:
Direct materials
Direct labor
Variable overhead
Standard Quantity or Hours
3.5 grams
0.7 hours
0.7 hours
The company reported the following results concerning this product in July.
Actual output
Raw materials used in production
Actual direct labor-hours
Purchases of raw materials
Actual price of raw materials purchased
Actual direct labor rate
Actual variable overhead rate
Standard Price or Rate
$ 1.00 per gram
$ 11.00 per hour
$ 2.00 per hour
The variable overhead rate variance for July is:
3,000 units
11,370 grams
1,910 hours
12,100 grams
$ 1.20 per gram
$11.40 per hour
$ 2.10 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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc525a2a0-4c52-4545-8847-068adfbbdddc%2Faa3249cd-db85-4217-ae6b-4279bc89c8c6%2Flph1bdj_processed.png&w=3840&q=75)
Transcribed Image Text:Bulluck Corporation makes a product with the following standard costs:
Direct materials
Direct labor
Variable overhead
Standard Quantity or Hours
3.5 grams
0.7 hours
0.7 hours
The company reported the following results concerning this product in July.
Actual output
Raw materials used in production
Actual direct labor-hours
Purchases of raw materials
Actual price of raw materials purchased
Actual direct labor rate
Actual variable overhead rate
Standard Price or Rate
$ 1.00 per gram
$ 11.00 per hour
$ 2.00 per hour
The variable overhead rate variance for July is:
3,000 units
11,370 grams
1,910 hours
12,100 grams
$ 1.20 per gram
$11.40 per hour
$ 2.10 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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