Question

Glendale Brands Company uses standard costs for its manufacturing division. Standards specify 0.1 direct labor hours per unit of product. At the beginning of the year, the static budget for variable overhead costs included the following data: Production volume 6,100 units Budgeted variable overhead costs $13,500 Budgeted direct labor hours (DLHr) 610 hours At the end of the year, actual data were as follows: Production volume 4,100 units Actual variable overhead costs $15,100 Actual direct labor hours (DLHr) 480 hours What is the variable overhead efficiency variance? (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.)Answer A $2,202 UAnswer B $1,549 FAnswer C $2,202 FAnswer D $1,549 U

Answer 1

The correct option is D

Variable overhead efficiency variance $1,549.17 unfavorable

Step-by-step explanation:

Variable overhead efficiency variance: A variance is the difference between a standard cost and the actual cost. Variable overhead efficiency variance aims to determine the savings or extra cost incurred on variable overhead as a result of workers being faster or slower that expected.

To calculate this variance, we do as follows:

Standard variable overhead rate per hour

= Budgeted Variable overhead cost/Budgeted direct labour hours

= $13,500/610 hours

= $22.1311

Hours

4,100 units should have taken(4,100 × 0.1) = 410

but did take (i.e actual hours) 480

Efficiency variance in hours 70 unfavorable

Standard rate × $22.131

Variable overhead efficiency variance $1,549.17 unfavorable