The Dillon Corporation makes and sells a single product.Overhead costs are applied on the basis of standard direct labor-hours.The standard cost card shows that 5 direct labor-hours are required per unit.The Dillon Corporation had the following budgeted and actual data for March: The variable overhead efficiency variance for March is:
A)$12,400 F
B)$6,160 U
C)$12,400 U
D)$6,160 F

Question

The Dillon Corporation makes and sells a single product.Overhead costs are applied on the basis of standard direct labor-hours.The standard cost card shows that 5 direct labor-hours are required per unit.The Dillon Corporation had the following budgeted and actual data for March:  The variable overhead efficiency variance for March is:
A)$12,400 F 
B)$6,160 U 
C)$12,400 U 
D)$6,160 F

Quizplus · Accepted Answer

Standard hours per unit = 154,000 hours ÷ 30,800 units = 5 hours pe unit
SH = 33,900 units × 5 hours per unit = 169,500 hours
SR = $123,200 ÷ 154,000 hours = $0.80 per hour
Variable overhead efficiency variance = (AH - SH)× SR
= (161,800 hours - 169,500 hours)× $0.80 per hour
= (-7,700 hours)× $0.80 per hour
= $6,160 F

The Dillon Corporation Makes and Sells a Single Product