Question

Tharaldson Corporation makes a product with the following standard costs: Standard Quantity or HoursStandard Price or RateStandard Cost Per Unit Direct materials 5.8ounces$3.00per ounce$17.40 Direct labor 0.5hours$12.00per hour$6.00 Variable overhead 0.5hours$5.00per hour$2.50 The company reported the following results concerning this product in June. Originally budgeted output 3,800units Actual output 3,400units Raw materials used in production 20,800ounces Purchases of raw materials 21,900ounces Actual direct labor-hours 520hours Actual cost of raw materials purchases$42,500 Actual direct labor cost$13,800 Actual variable overhead cost$3,900 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 June is: Multiple Choice

$6,490 F
$5,900 U
$6,490 U
$5,900 F

Answer 1

variable overhead efficiency variance= $5,900 favorable

Step-by-step explanation:

Giving the following information:

Standard Variable overhead:

0.5 hours

$5.00 per hour

Actual output= 3,400 units

Actual direct labor-hours= 520 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

variable overhead efficiency variance= (1,700 - 520)*5= $5,900 favorable