Crawford Company’s standard fixed overhead cost is $6 per direct labour hour based on budgeted fixed costs of $600,000. The standard allows 1 direct labour hour per unit. During 2006, Crawford produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labour.
-Refer to the figure.What is the variable overhead efficiency variance for Griffen?
A)$2,000 (U)
B)$4,000 (U)
C)$8,000 (U)
D)$20,000 (U)

Question

Quizplus · Accepted Answer

The variable overhead efficiency variance is calculated as (Actual hours - Standard hours allowed) x Standard variable overhead rate. Here, the standard hours allowed for 110,000 units is 110,000 hours. The actual hours are 212,000. The difference is 102,000 hours. If the standard variable overhead rate is $0.08 per hour (assuming from the context), the variance is 102,000 x $0.08 = $8,000 (U).

Crawford Company’s Standard Fixed Overhead Cost Is $6 Per Direct