Franklin Glass Works uses a standard cost system in which manufacturing overhead is applied on the basis of standard direct labor-hours. Each unit requires two standard hours of direct labor for completion. The denominator activity for the year was based on budgeted production of 200,000 units. Total overhead was budgeted at $900,000 for the year, and the fixed manufacturing overhead rate was $1.50 per direct labor-hour. The actual data pertaining to the manufacturing overhead for the year are presented below:
-Franklin's variable overhead efficiency variance for the year is:
A)$33,000 unfavorable
B)$35,200 favorable
C)$35,200 unfavorable
D)$33,000 favorable

Question

Franklin Glass Works uses a standard cost system in which manufacturing overhead is applied on the basis of standard direct labor-hours. Each unit requires two standard hours of direct labor for completion. The denominator activity for the year was based on budgeted production of 200,000 units. Total overhead was budgeted at $900,000 for the year, and the fixed manufacturing overhead rate was $1.50 per direct labor-hour. The actual data pertaining to the manufacturing overhead for the year are presented below: 
-Franklin's variable overhead efficiency variance for the year is:
A)$33,000 unfavorable 
B)$35,200 favorable 
C)$35,200 unfavorable 
D)$33,000 favorable

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead at capacity F1F1F1S1F1F1F10 Estimated total amount of the allocation base at capacity = $900,000 F1F1F1S1F1F1F10 (200,000 units F1F1F1S1F1F1F10 2 hours per unit)= $2.25 per hour
Predetermined overhead rate = Fixed component of predetermined overhead rate + Variable component of predetermined overhead rate
$2.25 per hour = $1.50 per hour + Variable component of predetermined overhead rate
Variable component of predetermined overhead rate = $0.75 per hour = SR
SH = 198,000 units F1F1F1S1F1F1F10 2 hours per unit = 396,000 hours
Variable overhead efficiency variance = (AH - SH)SR
= (440,000 hours - 396,000 hours)$0.75 per hour
= (44,000 hours)$0.75 per hour = $33,000 U

Franklin Glass Works Uses a Standard Cost System in Which