Question

Dirickson Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. Standard Quantity or Hours per Unit of Output Inputs Direct materials Standard Price or Rate 7.6 ounces $9.40 per ounce $18.00 per hour $5.30 per hour Direct labor e.10 hours Variable manufacturing overhead e.10 hours The company has reported the following actual results for the product for July Actual output Raw materials purchased Actual cost of raw materials purchased Raw materials used in production Actual direct labor-hours Actual direct labor cost Actual variable overhead cost 7,600 units 63,eee ounces $541,800 57,750 ounces 820 hours $ 16,072 $ 4,592 The variable overhead efficiency variance for the month is closest to:

$336 F

$318 F

$336 U

$318 U

Answer 1

Answer-The variable overhead efficiency variance for the month is closest to =$318 U.

Explanation-Variable overhead efficiency variance=(Standard hours–Actual working hours)*Standard Rate

= ($760 hours - $820 hours)*$5.30 per hour   

= $318 Unfavorable

Where:-

Standard hours = Standard hours per unit*Actual units

=0.10 standard hours per unit*7600 units

= 760 hours