Question

Novelli Corporation makes a product whose variable overhead standards are based on direct labor-hours. The quantity standard is 1.5 hours per unit. The variable overhead rate standard is $11.50 per hour. In September, the company produced 1,400 units using 2,090 direct labor-hours. The actual variable overhead rate was $12.90 per hour. The variable overhead efficiency variance for September is:

Answer 1

variable overhead efficiency variance= $115 favorable

Step-by-step explanation:

Giving the following information:

The quantity standard is 1.5 hours per unit.

The variable overhead rate standard is $11.50 per hour.

In September, the company produced 1,400 units using 2,090 direct labor-hours.

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

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

Standard quantity= 1.5*1,400= 2,100 hours

variable overhead efficiency variance= (2,100 - 2,090)*11.5

variable overhead efficiency variance= $115 favorable