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The Apoundright Company uses standard costing and has established the following standards for its single product:

Direct materials: 2 gallons at $3 per gallon
Direct labor: 0.5 hours at $8 per hour
Variable overhead: 0.5 hours at $2 per hour

During November, the company made 4,000 units and incurred the following costs:

Direct materials purchased: 8,100 gallons at $3.10 per gallon
Direct materials used: 7,600 gallons
Direct labor used: 2,200 hours at $8.25 per hour
Actual variable overhead: $4,175

The company applies variable overhead to products on the basis of standard direct labor-hours.

The total variable overhead variance (including both the rate and efficiency variances) for November was:

A) $175 U
B) $225 F
C) $225 U
D) $400 U

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M955938

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