A. This answer is incorrect. See correct answer for an explanation.

B. This answer is incorrect. See correct answer for an explanation.

C. We can use the variable overhead efficiency variance formula, (AQ - SQ) × SP, to find the answer to

this. The unknown in that formula that we are looking for is SP, the standard rate.

The question tells us that 9,600 direct labor hours were used, so that is the AQ in the formula.

We can calculate the SQ, as follows: The standard is 10,000 hours of direct labor for the production of 5,000 units. Therefore, the standard for direct labor hours per unit is 10,000 ÷ 5,000, or 2 hours of DL per unit manufactured. Since 4,500 units were produced during June, the direct labor standard for those 4,500 units (SQ) was 4,500 × 2 = 9,000.

The question also tells us that the variable overhead efficiency variance was $2,400 Unfavorable. We can now set up the formula:

(AQ - SQ) × SP = Variable Overhead Efficiency Variance

(9,600 - 9,000) × SP = 2,400 U  (a positive variance is unfavorable in a cost item)

Solving for SP:

600 SP = 2,400

SP = $4.00

D. This is the actual incurred variable overhead of $39,360 divided by the actual number of direct labor hours used (9,600).