Galla Corporation Makes a Product with the Following Standard Costs

question 177

Multiple Choice

Galla Corporation makes a product with the following standard costs:


The company budgeted for production of 2,400 units in June, but actual production was 2,500 units. The company used 19,850 pounds of direct material and 980 direct labor-hours to produce this output. The company purchased 21,700 pounds of the direct material at $6.70 per pound. The actual direct labor rate was $19.20 per hour and the actual variable overhead rate was $1.80 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 June is:

• A)$196 U
• B)$200 F
• C)$200 U
• D)$196 F

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Definitions:

Stock Options

These are contracts that give the holder the right to buy or sell shares of a stock at a predetermined price within a specific time period.

Option Holders

Individuals or entities that possess the rights to execute the purchase or sale of a specific asset at a specified price before the option expires.

Stock Ownership Plans

Employee benefit plans that provide workers with an ownership interest in the company through stock ownership, often aimed at improving employee motivation and loyalty.

Human Resource Management

The strategic approach to the effective management of people in a company or organization to help their business gain a competitive advantage, including hiring, training, and employee benefit design.