Figures Incorporated makes a single product--an electrical motor used in many long-haul trucks.The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period.Data concerning the most recent year appear below:
The variable overhead efficiency variance is:
A) $5,389 F
B) $5,389 U
C) $4,896 F
D) $4,896 U

Question

Figures Incorporated makes a single product--an electrical motor used in many long-haul trucks.The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period.Data concerning the most recent year appear below:
 The variable overhead efficiency variance is:
A) $5,389 F 
B) $5,389 U 
C) $4,896 F 
D) $4,896 U

Quizplus · Accepted Answer

Variable component of the predetermined overhead rate (SR) = $66,570/21,000 labor-hours
= $3.17 per labor-hour
Variable overhead efficiency variance = (AH - SH) × SR
= (19,700 labor-hours - 18,000 labor-hours) × $3.17 per labor-hour
= (1,700 labor-hours) × $3.17 per labor-hour
= $5,389 U

Figures Incorporated Makes a Single Product--An Electrical Motor Used in Many