Question

Bulluck Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 5.10 grams $ 2.60 per gram Direct labor 0.60 hours $ 27.00 per hour Variable overhead 0.60 hours $ 3.60 per hour The company reported the following results concerning this product in July. Actual output 4,600 units Raw materials used in production 12,970 grams Actual direct labor-hours 2,500 hours Purchases of raw materials 13,700 grams Actual price of raw materials purchased $ 2.80 per gram Actual direct labor rate $ 13.00 per hour Actual variable overhead rate $ 3.70 per hour The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The variable overhead efficiency variance for July is:

Answer 1

The correct answer is $936 favorable.

Step-by-step explanation:

According to the scenario, the computation of the given data are as follows:

we can calculate the variable overhead efficiency variance by using following formula:

Variable OH efficiency variance = (Actual Hours - Standard Hours) × Standard Rate

Where,

Standard hours = 4,600 × 0.60 = 2,760

By putting the data, we get

Variable OH efficiency variance = ( 2,500 - 2,760) × $3.60

= -$936 ( negative sign shows favorable)

= $936 Favorable