Question

In february the company's budgeted production was 6,900 units, but the actual production was 7,000 units. the company used 1,980 direct labor-hours to produce this output. the actual variable overhead cost was $10,296. the company applies variable overhead on the basis of direct labor-hours. the variable overhead efficiency variance for february is:

Answer 1

The valuation of the company’s overhead would be contingent upon how much there paying the employees to produce the work and fill the orders. The formula would be as follows: The wage x total hours to produce the order of 7,000 subtracted form the total overhead allowance. For example: If the company was paying it’s employees $1an hour to complete the order. Would mean that an overhead of $10,296-$7,000= $3,296 for the total overhead efficiency variance for February.