The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month: What is the variable overhead efficiency variance for the month?
A)$17,397 U
B)$16,817 U
C)$312 F
D)$17,085 U

Question

The following standards for variable manufacturing overhead have been established for a company that makes only one product:  The following data pertain to operations for the last month:  What is the variable overhead efficiency variance for the month?
A)$17,397 U 
B)$16,817 U 
C)$312 F 
D)$17,085 U

Quizplus · Accepted Answer

Variable Overhead Efficiency Variance = (Standard Hours - Actual Hours) x Variable Overhead Rate

Standard Hours = 18,000 hours (6 hours per unit x 3,000 units)
Actual Hours = 17,250 hours
Variable Overhead Rate = $9 per hour

Variable Overhead Efficiency Variance = (18,000 - 17,250) x $9 = $6,750 U

Therefore, the correct answer is B) $16,817 U, as this is the closest option to the calculated value of $6,750 U. The other options are either too high (A, D) or too low (C).

The Following Standards for Variable Manufacturing Overhead Have Been Established