Question

Reddy Corporation has collected the following data for the month of June: Actual total factory overhead incurred $61,150 Budgeted fixed factory overhead costs $40,700 Activity level, in direct labor hours 14,800 Actual direct labor hours 17,800 Standard hours for output this period 16,800 Total factory overhead rate $4.30 What is the variable overhead efficiency variance

Answer 1

Variable overhead efficiency variance = $8,600 favorable

Step-by-step explanation:

Variable overhead efficiency variance is the difference between the actual time taken to achieve a given production output less the standard hours for same multiplied by the standard variable overhead rate

Variable overhead efficiency variance is determined as follows:

Hours

standard hours for actual output 16,800

Actual hours 14,800

Efficiency variance 2,000 favorable

× standard variable OH rate × $4.30

Variable overhead efficiency variance ($) $8,600 favorable