The following information is available from the Terry Company:$\begin{array}{lrr}
\text { Actual total factory overhead cost incurred } & \$ 25,000 \
\text { Actual fixed overhead cost incurred } & \$ 10,400 \
\text { Budgeted fixed overhead expenses } & \$ 11,000 \
\text { Actual direct labor hours (DLH) worked } & 4,400 \
\text { Standard DLHs for this period's production (output) } & 4,000 \
\text { Standard variable overhead rate per DLH } & \$ 3.00 \
\text { Standard fixed overhead rate per DLH } & \$ 2.50
\end{array}$What was the variable overhead efficiency variance for the period, to the nearest whole dollar?
A) $600 favorable.
B) $800 unfavorable.
C) $1,200 unfavorable.
D) $1,400 unfavorable.
E) $2,000 unfavorable.

Question

The following information is available from the Terry Company:$\begin{array}{lrr}
\text { Actual total factory overhead cost incurred } & \$ 25,000 \
\text { Actual fixed overhead cost incurred } & \$ 10,400 \
\text { Budgeted fixed overhead expenses } & \$ 11,000 \
\text { Actual direct labor hours (DLH) worked } & 4,400 \
\text { Standard DLHs for this period's production (output) } & 4,000 \
\text { Standard variable overhead rate per DLH } & \$  3.00 \
\text { Standard fixed overhead rate per DLH } & \$  2.50
\end{array}$What was the variable overhead efficiency variance for the period, to the nearest whole dollar?
A) $600 favorable.
B) $800 unfavorable.
C) $1,200 unfavorable.
D) $1,400 unfavorable.
E) $2,000 unfavorable.

Quizplus · Accepted Answer

The variable overhead efficiency variance is calculated as (Actual DLHs - Standard DLHs) x Standard variable overhead rate. Here, (4,400 - 4,000) x $3.00 = $1,200 unfavorable.

The Following Information Is Available from the Terry Company What Was the Variable Overhead Efficiency Variance for the Period