Exhibit 10-4
Zingler Inc.applies variable manufacturing overhead at a standard rate of $9 per direct labor hour.The standard quantity of direct labor is 4 hours per unit.Variable overhead costs totaled $90,000 for the month of December.A total of 15,000 direct labor hours were worked during December to produce 4,000 units.
-Refer to Exhibit 10-4.Based on this information,what is the variable overhead efficiency variance?
A)$48,000 favorable
B)$48,000 unfavorable
C)$9,000 unfavorable
D)$9,000 favorable
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

The variable overhead efficiency variance is calculated as (Actual hours - Standard hours) x Standard rate. Standard hours for 4,000 units is 4,000 units x 4 hours/unit = 16,000 hours. The variance is (15,000 - 16,000) x $9 = -1,000 x $9 = $9,000 favorable.

Exhibit 10-4 Zingler Inc.applies Variable Manufacturing Overhead at a Standard Rate of Rate