The Haney Corporation has a standard costing system. Variable manufacturing overhead is applied on the basis of direct labor-hours. The following data are available for January: $\bullet$Actual variable manufacturing overhead: $25,500
$\bullet$Actual direct labor-hours worked: 5,800
$\bullet$Variable overhead rate variance: $600 Favorable
$\bullet$Variable overhead efficiency variance: $2,475 Unfavorable
The standard hours allowed for January production is:
A) 5,975 hours
B) 5,800 hours
C) 5,425 hours
D) 5,250 hours

Question

Quizplus · Accepted Answer

Variable overhead rate variance = (AH × AR) - (AH × SR)
$600 F = $25,500 - (5,800 hours × SR)
-$600 = $25,500 - (5,800 hours × SR)
5,800 hours × SR = $25,500 + $600
5,800 hours × SR = $26,100
SR = $26,100 ÷ 5,800 hours
SR = $4.50 per hour
Variable overhead efficiency variance = (AH - SH) × SR
$2,475 U = (5,800 hours - SH) × $4.50 per hour
$2,475 = (5,800 hours - SH) × $4.50 per hour
5,800 hours - SH = $2,475 ÷ $4.50 per hour
5,800 hours - SH = 550 hours
SH = 5,800 hours - 550 hours
SH = 5,250 hours

The Haney Corporation Has a Standard Costing System ∙\bullet∙ Actual Variable Manufacturing Overhead: $25,500

The Haney Corporation Has a Standard Costing System $\bullet$ Actual Variable Manufacturing Overhead: $25,500