Pippin Inc. has provided the following data concerning one of the products in it

Question

Pippin Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. Inputs Direct materials Direct labor Variable manufacturing overhead Standard Quantity or Hours per Unit of Output 5.0 grams 0.30 hours 0.30 hours Standard Price or Rate $ 7.00 per gram $21.30 per hour 9.60 per hour The company has reported the following actual results for the product for June: Actual output Raw materials purchased Actual price of raw materials Raw materials used in production Actual direct labor-hours Actual direct labor rate Actual variable overhead rate 8,500 units 48,100 grams $ 7.78 per gram 42,490 grams 2,300 hours s 21.70 per hour $9.80 per hour K Prex 7 f Next> e o TOSHIBA

Explanation / Answer

Ans. Option 3rd $2400 F *Calcuation: Variable overhead efficiency variance = (Standard hours - Actual hours) * Standard overhead rate (2550 - 2300) * 9.60 250 * 9.60 2400 Favorable *Calculation: *Standard hours = Direct labor hours per unit * Actual output 0.30 * 8500 2550 *Actual hours       =   2300 *Standard variable overhead rate = $9.60

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