Hurren Corporation makes a product with the following standard costs: The company reported the following results concerning this product in June. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
-The variable overhead efficiency variance for June is:
A)$185 F
B)$200 U
C)$185 U
D)$200 F

Question

Hurren Corporation makes a product with the following standard costs:  The company reported the following results concerning this product in June.  The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
-The variable overhead efficiency variance for June is:
A)$185 F 
B)$200 U 
C)$185 U 
D)$200 F

Quizplus · Accepted Answer

SH = 6,500 units F1F1F1S1F1F1F10 0.7 hours per unit = 4,550 hours
Variable overhead efficiency variance = (AH - SH)SR
= (4,500 hours - 4,550 hours)$4 per hour
= (-50 hours)$4 per hour = $200 F

Hurren Corporation Makes a Product with the Following Standard Costs