Jardell Corporation makes a product with the following standards for labor and variable overhead: The company budgeted for production of 6,400 units in June, but actual production was 6,400 units. The company used 3,180 direct labor-hours to produce this output. The actual variable overhead rate was $4.90 per hour. The company applies variable overhead on the basis of direct labor-hours.
-The variable overhead efficiency variance for July is:
A)$1,352 U
B)$1,352 F
C)$1,300 U
D)$1,300 F

Question

Jardell Corporation makes a product with the following standards for labor and variable overhead:  The company budgeted for production of 6,400 units in June, but actual production was 6,400 units. The company used 3,180 direct labor-hours to produce this output. The actual variable overhead rate was $4.90 per hour. The company applies variable overhead on the basis of direct labor-hours.
-The variable overhead efficiency variance for July is:
A)$1,352 U 
B)$1,352 F 
C)$1,300 U 
D)$1,300 F

Quizplus · Accepted Answer

SH = 7,500 units F1F1F1S1F1F1F10 0.4 hours = 3,000 hours
Variable overhead efficiency variance = (AH - SH)SR
= (2,740 hours - 3,000 hours)$5.00 per hour
= (-260 hours)$5.00 per hour = $1,300 F

Jardell Corporation Makes a Product with the Following Standards for Labor