Question

The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 9.0 hours Standard variable overhead rate $ 15.40 per hour The following data pertain to operations for the last month: Actual hours 2,975 hours Actual total variable manufacturing overhead cost $ 46,595 Actual output 250 units What is the variable overhead efficiency variance for the month

Answer 1

$11.165 unfavorable

Step-by-step explanation:

The formula to compute the variable overhead efficiency variance is shown below:

= (Actual direct labor hours - standard direct labor hours) × variable overhead per hour

where,

Actual direct labor hours is 2,975

And, the standard direct labor hours equal to

= 250 units × 9

= 2,250

Now put these values to the above formula

So, the value would equal to

= (2,975 - 2,250) × $15.40

= $11.165 unfavorable