Snuggs Corporation makes a product with the following standard costs: The company reported the following results concerning this product in October. 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 October is:
A)$82 U
B)$80 U
C)$82 F
D)$80 F

Question

Snuggs Corporation makes a product with the following standard costs:  The company reported the following results concerning this product in October.  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 October is:
A)$82 U 
B)$80 U 
C)$82 F 
D)$80 F

Quizplus · Accepted Answer

SH = 1,100 units F1F1F1S1F1F1F10 0.3 hours per unit = 330 hours
Variable overhead efficiency variance = (AH - SH)SR
= (350 hours - 330 hours)$4.00 per hour
= (20 hours)$4.00 per hour = $80 U

Snuggs Corporation Makes a Product with the Following Standard Costs