Bressman Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. The company has reported the following actual results for the product for May:
The variable overhead efficiency variance for the month is closest to:
A) $268 U
B) $268 F
C) $276 F
D) $276 U

Question

Bressman Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.  The company has reported the following actual results for the product for May:
 The variable overhead efficiency variance for the month is closest to:
A) $268 U 
B) $268 F 
C) $276 F 
D) $276 U

Quizplus · Accepted Answer

SH = 9,300 units × 0.20 hours per unit = 1,860 hours
Variable overhead efficiency variance = (AH × SR) - (SH × SR)
= (AH - SH) × SR
= (1,820 hours - 1,860 hours) × $6.70 per hour
= (−40 hours) × $6.70 per hour
= $268 F