(Appendix 10A) Standard Corporation has developed standard manufacturing overhead costs based on a capacity of 180,000 direct labor-hours (DLHs) as follows:
Standard overhead costs per unit:
Variable portion: 2 DLHs × $3 per DLH = $6
Fixed portion: 2 DLHs × $5 per DLH = $10
The following data pertain to operations in April:

-The variable overhead efficiency variance for April was:
A) $15,000 Unfavorable
B) $23,000 Unfavorable
C) $38,000 Favorable
D) $38,000 Unfavorable

Question

(Appendix 10A) Standard Corporation has developed standard manufacturing overhead costs based on a capacity of 180,000 direct labor-hours (DLHs) as follows:
Standard overhead costs per unit:
Variable portion: 2 DLHs × $3 per DLH = $6
Fixed portion: 2 DLHs × $5 per DLH = $10
The following data pertain to operations in April:
 
-The variable overhead efficiency variance for April was:
A) $15,000 Unfavorable 
B) $23,000 Unfavorable 
C) $38,000 Favorable 
D) $38,000 Unfavorable

Quizplus · Accepted Answer

SH = 80,000 units × 2.00 hours per unit = 160,000 hours
Variable overhead efficiency variance = (AH − SH) × SR
= (165,000 hours − 160,000 hours) × $3.00 per hour
= (5,000 hours) × $3.00 per hour
= $15,000 U

(Appendix 10A) Standard Corporation Has Developed Standard Manufacturing Overhead Costs