Figure 6

-Refer to Figure 6. The variable overhead efficiency variance would be
A) £1,000 favorable
B) £600 favorable
C) £400 favorable
D) £200 favorable

Question

Figure 6
 
-Refer to Figure 6. The variable overhead efficiency variance would be
A) £1,000 favorable 
B) £600 favorable 
C) £400 favorable 
D) £200 favorable

Quizplus · Accepted Answer

To calculate variable overhead efficiency variance, we use the formula: 
Actual hours worked x (Standard variable rate - Actual variable rate)
In the given figure, actual hours worked = 880, standard variable rate = £6 per hour and actual variable rate = £5 per hour.
Therefore, variable overhead efficiency variance = 880 x (6-5) = £880.
However, the question is asking for the variance in terms of favorable (meaning a reduction in costs). Therefore, the answer would be £880 favorable. 
Out of the given options, the closest one is B) £600 favorable. However, this is not the correct answer.

Figure 6 -Refer to Figure 6. the Variable Overhead Efficiency Variance Would