Sande Corporation makes a product with the following standard costs: In November the company's budgeted production was 2,900 units but the actual production was 3,000 units. The company used 27,670 grams of the direct material and 1,390 direct labor-hours to produce this output. During the month, the company purchased 31,700 grams of the direct material at a cost of $196,540. The actual direct labor cost was $29,607 and the actual variable overhead cost was $2,502.

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 November is:
A)$220 U
B)$198 F
C)$198 U
D)$220 F

Question

Sande Corporation makes a product with the following standard costs:

In November the company's budgeted production was 2,900 units but the actual production was 3,000 units. The company used 27,670 grams of the direct material and 1,390 direct labor-hours to produce this output. During the month, the company purchased 31,700 grams of the direct material at a cost of $196,540. The actual direct labor cost was $29,607 and the actual variable overhead cost was $2,502.

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 November 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 November is:
A)$220 U 
B)$198 F 
C)$198 U 
D)$220 F

Quizplus · Accepted Answer

SH = 3,000 units F1F1F1S1F1F1F10 0.5 hours per unit = 1,500 hours
Variable overhead efficiency variance = (AH - SH)SR
= (1,390 hours - 1,500 hours)$2.00 per hour
= (-110 hours)$2.00 per hour = $220 F

Sande Corporation Makes a Product with the Following Standard Costs