A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on direct labor-hours. The following data pertain to operations for the last month:
What is the variable overhead efficiency variance for the month?
A) $11,076 U
B) $11,037 F
C) $11,037 U
D) $216 U

Question

A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on direct labor-hours.  The following data pertain to operations for the last month:
 What is the variable overhead efficiency variance for the month?
A) $11,076 U 
B) $11,037 F 
C) $11,037 U 
D) $216 U

Quizplus · Accepted Answer

SH = 600 units × 7.20 hours per unit = 4,320 hours
Variable overhead efficiency variance = (AH − SH) × SR
= (5,100 hours − 4,320 hours) × $14.20 per hour
= (780 hours) × $14.20 per hour
= $11,076 U

A Manufacturing Company That Has Only One Product Has Established