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 June is:
A)$100 F
B)$98 F
C)$100 U
D)$98 U

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 June is:
A)$100 F 
B)$98 F 
C)$100 U 
D)$98 U

Quizplus · Accepted Answer

SH = 6,400 units F1F1F1S1F1F1F10 0.5 hours per unit = 3,200 hours
Variable overhead efficiency variance = (AH - SH)SR
= (3,180 hours - 3,200 hours)$5.00 per hour
= (-20 hours)$5.00 per hour = $100 F

Jardell Corporation Makes a Product with the Following Standards for Labor