Caquias Corporation makes a product with the following standard costs: The company reported the following results concerning this product in August. 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 labor efficiency variance for August is:
A)$480 F
B)$500 U
C)$500 F
D)$480 U

Question

Caquias Corporation makes a product with the following standard costs:  The company reported the following results concerning this product in August.  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 labor efficiency variance for August is:
A)$480 F 
B)$500 U 
C)$500 F 
D)$480 U

Quizplus · Accepted Answer

SH = 2,100 units F1F1F1S1F1F1F10 0.5 hour per unit = 1,050 hours
Variable overhead efficiency variance = (AH - SH)SR
= (1,100 hours - 1,050 hours)$10.00 per hour
= (50 hours)$10.00 per hour = $500 U

Caquias Corporation Makes a Product with the Following Standard Costs