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Total variance... Not sure if I am doing this right?
Standard costs for one bag:
Standard Quantity Standard cost per bag Direct Material 20 pounds $8.00 Direct Labor 0.1 hours $1.10 Variable Overhead 0.1 hours $0.40 The company had no beginning inventories of any kind on January 1. Variable overhead is applied to production on the basis of standard direct-labor hours. During January, the company recorded following activity: Production: 4000 bags Direct materials purchased: 85,000 pounds at a cost of $32,300 Direct-labor worked: 390 hours at a cost of $4875 Variable overhead incurred: $1475 Inventory of direct materials on January 31: 3000 pounds Total Variance (both rate & efficiency) for variable overhead for January is? My Calculations: Rate: $1475-(390*4)=85F Efficiency: (390*4)-(400*4)=40F Total variance for variable overhead: 85F-40F= 45F I don't think that is right but I am not quite sure what I am doing wrong. Any help would be greatly appreciated. Thank you |
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