Novelli Corporation makes a product whose variable overhead standards are based on direct labor-hours. The quantity standard is 0.6 hours per unit. The variable overhead rate standard is $5.00 per hour. In September the company produced 1,600 units using 950 direct labor-hours. The actual variable overhead rate was $5.10 per hour. The variable overhead efficiency variance for September is:
A)$51 U
B)$50 U
C)$51 F
D)$50 F

Question

Quizplus · Accepted Answer

The variable overhead efficiency variance is calculated as (Actual hours - Standard hours) x Standard rate. Standard hours for 1,600 units is 1,600 x 0.6 = 960 hours. The variance is (950 - 960) x $5.00 = -10 x $5.00 = $50 F (Favorable).

Novelli Corporation Makes a Product Whose Variable Overhead Standards Are