Dooley Company has the following information available for variable overhead costs.Direct labor hours are the cost driver for variable overhead costs.
$\begin{array}{ll}
\text { Actual variable overhead costs } & \$ 4,700 \
\text { Standard variable overhead costs } & \$ 1.20 \text { per hou1 } \
\text { Actual direct labor hours } & 3,750 \text { hours } \
\text { Standard direct labor hours per unit } & 5 \text { hours } \
\text { Units produced } & 700
\end{array}$
What is the variable overhead efficiency variance?
A) $300 Favorable
B) $300 Unfavorable
C) $500 Favorable
D) $500 Unfavorable

Question

Quizplus · Accepted Answer

The variable overhead efficiency variance is calculated as (Actual hours - Standard hours) x Standard rate. Standard hours = Standard hours per unit x Units produced = 5 hours/unit x 700 units = 3,500 hours. The variance = (3,750 hours - 3,500 hours) x $1.20/hour = 250 hours x $1.20/hour = $300 Unfavorable, because actual hours exceeded standard hours.

Dooley Company Has the Following Information Available for Variable Overhead