Harry Company's standard variable overhead rate is $6 per direct labour hour,and each unit requires 2 standard direct labour hours.During March,Harry recorded 6,000 actual direct labour hours,$37,000 actual variable overhead costs,and 2,900 units of product manufactured. What is the variable overhead efficiency variance for March for Harry?
A)$600 (U)
B)$1,200 (U)
C)$2,200 (U)
D)$2,200 (F)

Question

Quizplus · Accepted Answer

To calculate the variable overhead efficiency variance, we need to compare the actual hours worked with the standard hours allowed for the actual output.

In this case, the standard hours allowed for the actual output would be 2,900 units x 2 standard hours per unit = 5,800 standard hours.

The variable overhead efficiency variance can be calculated as:

Variable overhead efficiency variance = (Standard hours allowed - Actual hours worked) x Variable overhead rate

Variable overhead efficiency variance = (5,800 - 6,000) x $6 per direct labour hour

Variable overhead efficiency variance = $1,200 (U)

Therefore, the correct answer is B: $1,200 (U)

Harry Company's Standard Variable Overhead Rate Is $6 Per Direct