Question

Highfill Corporation's variable overhead is applied on the basis of direct labor-hours. The standard cost card for product D80D specifies 6.4 direct labor-hours per unit of D80D. The standard variable overhead rate is $5.90 per direct labor-hour. During the most recent month, 1,100 units of product D80D were made and 7,100 direct labor-hours were worked.

The actual variable overhead incurred was $45,230.

Required:

a. What was the variable overhead rate variance for the month?

b. What was the variable overhead efficiency variance for the month?

(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

	a. Variable overhead rate variance b. Variable overhead efficiency variance

Puvo, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product:

	Standard Quantity			Standard Price or Rate			Standard Cost
Direct materials		6.90	pounds	$	.70	per pound	$	4.83
Direct labor		0.60	hours	$	44.50	per hour	$	26.70
Variable manufacturing overhead		0.60	hours	$	9.60	per hour	$	5.76

During March, the following activity was recorded by the company:

• The company produced 3,500 units during the month.
• A total of 20,500 pounds of material were purchased at a cost of $14,680.
• There was no beginning inventory of materials on hand to start the month; at the end of the month, 4,720 pounds of material remained in the warehouse.
• During March, 1,200 direct labor-hours were worked at a rate of $41.50 per hour.
• Variable manufacturing overhead costs during March totaled $15,161.

  The direct materials purchases variance is computed when the materials are purchased.

  The variable overhead rate variance for March is:

  Multiple Choice

• $4,355 F

• $4,355 U

• $3,641 U

• $3,641 F

Answer 1

Data Varaible OH Standard Rate SR Standard hours per unit Standard Hours for Actual output SH Actual Output Actual hours Worked AH Actual Rate =45230/7100 Answer: Variable Overhead Rate Variance AH*(AR-SR)= 7100*(6.37-5.90) Overhead Efficiency Varaince (AH*SR)-(SH*SR)= (7100-7040)*5.90 5.90 Per hour 6.40 Hours 7040 Hours 1100 units 7100 Hours 6.37 AR 3340 U 354

Data Varaible OH Standard Rate SR 9.60 Per hour Actual hours Worked | АН) 1200 Hours Actual Rate =49680/5400 AR 12.63 Per Hr Answer: $3,641 Unfavorable Variable Overhead Rate Variance AH*(AR-SR)=1200*(9.60-12.63) 3641 Unfavorable