Gentile Corporation makes a product with the following standard costs: The company produced 6,000 units in May using 36,970 kilos of direct material and 4,340 direct labor-hours. During the month, the company purchased 40,400 kilos of the direct material at $4.70 per kilo. The actual direct labor rate was $13.70 per hour and the actual variable overhead rate was $2.70 per hour.

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 May is:
A)$1,380 F
B)$1,242 U
C)$1,242 F
D)$1,380 U

Question

Gentile Corporation makes a product with the following standard costs:

The company produced 6,000 units in May using 36,970 kilos of direct material and 4,340 direct labor-hours. During the month, the company purchased 40,400 kilos of the direct material at $4.70 per kilo. The actual direct labor rate was $13.70 per hour and the actual variable overhead rate was $2.70 per hour.

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 May is:

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 May is:
A)$1,380 F 
B)$1,242 U 
C)$1,242 F 
D)$1,380 U

Quizplus · Accepted Answer

SH = 6,000 units F1F1F1S1F1F1F10 0.8 hour per unit = 4,800 hours
Variable overhead efficiency variance = (AH - SH)SR
= (4,340 hours - 4,800 hours)$3.00 per hour
= (-460 hours)$3.00 per hour = $1,380 F

Gentile Corporation Makes a Product with the Following Standard Costs