Tharaldson Corporation makes a product with the following standard costs: The company reported the following results concerning this product in June.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
The variable overhead efficiency variance for June is:
A) $372 F
B) $372 U
C) $360 F
D) $360 U

Question

Tharaldson Corporation makes a product with the following standard costs:  The company reported the following results concerning this product in June.
 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
The variable overhead efficiency variance for June is:
A) $372 F 
B) $372 U 
C) $360 F 
D) $360 U

Quizplus · Accepted Answer

SH = 2,800 units × 0.2 hours per unit = 560 hours
Variable overhead efficiency variance = (AH - SH) × SR
= (500 hours − 560 hours) × $6.00 per hour
= (−60 hours) × $6.00 per hour
= $360 F

Tharaldson Corporation Makes a Product with the Following Standard Costs