Question

Actual production 11,620 packages Budgeted production 12,500 packages Standard direct labor hours 1.52 direct labor hours per package Actual direct labor hours 18,731 Standard variable overhead rate $3 per direct labor hour Actual variable overhead costs $47,743. Calculate the variable overhead spending and efficiency variances.

Answer 1

8,450 Favorable ; 3,206 Unfavorable

Step-by-step explanation:

Variable overhead spending variance:

= (Standard rate - Actual rate) × Actual hours

= ($3 × 18,731) - $47,743

= 8,450 Favorable

Variable overhead efficiency variance:

= (Standard hour - Actual hour) × Standard rate

= [(11,620 × 1.52) - 18,731] × $3

= (-1,068.6) × $3

= 3,206 Unfavorable