Miguez Corporation Makes a Product with the Following Standard Costs

question 4

Multiple Choice

Miguez Corporation makes a product with the following standard costs:
The company budgeted for production of 2,600 units in September, but actual production was 2,500 units. The company used 5,440 liters of direct material and 1,680 direct labor-hours to produce this output. The company purchased 5,800 liters of the direct material at $7.20 per liter. The actual direct labor rate was $24.10 per hour and the actual variable overhead rate was $1.90 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 September is:

• A) $175 F
• B) $168 U
• C) $168 F
• D) $175 U

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Definitions:

Defect Rate

The percentage or rate at which a process or product fails to meet quality standards or produces errors, used as a measure of quality control.

Control Chart

A tool used in statistical process control to monitor, control, and improve process performance over time by identifying variations.

Acceptance Sampling

A statistical quality control method where a random sample is tested to decide if the entire batch meets the specified quality criteria.