Budgeted variable overhead for the year is $130,000.Expected activity is 20,000 standard direct labour hours.The actual hours worked were 18,250,and the standard hours allowed for actual production were 19,750.What was the variable overhead efficiency variance?
A)$0
B)$1,500 F
C)$9,750 F
D)$12,000 F

Question

Quizplus · Accepted Answer

The variable overhead efficiency variance is calculated as (Standard hours allowed - Actual hours worked) x Variable overhead rate per hour. The variable overhead rate per hour is $130,000 / 20,000 hours = $6.50. The variance is (19,750 - 18,250) x $6.50 = $9,750 F (Favorable).

Budgeted Variable Overhead for the Year Is $130,000