Budgeted variable overhead for the year is $150,000.Expected activity is 30,000 standard direct labor hours.The actual hours worked were 15,000 and the standard hours allowed for actual production were 18,000.The variable overhead efficiency variance is:
A) $14,600 F.
B) $18,000 F.
C) $30,000 F.
D) $15,000 F.
E) None of these

Question

Quizplus · Accepted Answer

Efficiency variance = (Actual Hours - Standard Hours) × *Standard Variable Overhead Rate
= (15,000 - 18,000) × $5.00 = $15,000 F
*Standard Variable Overhead Rate = Budgeted overhead rate / Standard labor hours
= $150,000 / 30,000 = $5.00 per direct labor hour

Budgeted Variable Overhead for the Year Is $150,000