Question

Lance Production Company has the following information:

Standard fixed factory overhead rates per direct labor-hour $1.50
Standard variable factory overhead rates per direct labor-hour $5.00
Actual number of units produced 6,000 units
Actual factory overhead costs (includes $70,000 fixed) $78,000
Actual direct labor hours 6,000 hours
Standard factory overhead rates are based on a normal monthly volume of 5,000 units (1 standard direct labor-hour per unit)
What is Lance's variable overhead efficiency variance?
A. $4,000 (F)
B. $3,000 (F)
C. $6,000 (U)

Answer 1

$0

Step-by-step explanation:

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

= (6,000 hours * $1) - 6,000 hours * $5

= (6,000 hours - 6,000 hours) * $5

= 0 * $5

= $0

Thus, the Variance overhead efficiency variance = $0