Question

A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on direct labor-hours. Standard hours per unit of output 4.60 DLHs Standard variable overhead rate $ 11.55 per DLH The following data pertain to operations for the last month: Actual direct labor-hours 8,500 DLHs Actual total variable manufacturing overhead cost $ 95,930 Actual output 1,700 units What is the variable overhead efficiency variance for the month

Answer 1

variable overhead efficiency variance= $7,854 unfavorable

Step-by-step explanation:

Giving the following information:

Standard hours per unit of output 4.60 DLHs

Standard variable overhead rate $ 11.55 per DLH

Actual direct labor-hours 8,500 DLHs

Actual output of 1,700 units

To determine the variable overhead efficiency variance, we need to use the following formula:

variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate

Standard quantity= 1,700*4.6= 7,820 hours

variable overhead efficiency variance= (7,820 - 8,500)*11.55= $7,854 unfavorable