Question

Juhasz Corporation makes a product with the following standards for direct labor and variable overhead: Standard Quantity or Hours Standard Price or Rate Direct labor 0.70 hours $ 37.00 per hour Variable overhead 0.70 hours $ 5.70 per hour In August the company produced 9,600 units using 6,850 direct labor-hours. The actual variable overhead cost was $36,990. The company applies variable overhead on the basis of direct labor-hours. The variable overhead efficiency variance for August is:

Answer 1

$741 U

Step-by-step explanation:

Juhasz Corporation

SH= 9,600 units × 0.70 hours per unit

= 6,720 hours

Variable overhead efficiency variance

= (AH – SH) × SR

= (6,850 hours − 6,720 hours) × $5.70 per hour

= (130 hours) × $5.70 per hour

= $741

Therefore the variable overhead efficiency variance for August is: $741 U