The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month: What is the variable overhead efficiency variance for the month?
A)$1,680 F
B)$1,190 U
C)$1,155 U
D)$1,190 F

Question

The following standards for variable manufacturing overhead have been established for a company that makes only one product:  The following data pertain to operations for the last month:  What is the variable overhead efficiency variance for the month?
A)$1,680 F 
B)$1,190 U 
C)$1,155 U 
D)$1,190 F

Quizplus · Accepted Answer

Variable overhead efficiency variance = (Actual hours worked x Standard variable overhead rate) - (Actual hours worked x Actual variable overhead rate)

= 25,000 x $5.70 - 25,000 x ($5.85/8.5)

= $142,500 - $123,345.59

= $19,154.41 U

Therefore, the variable overhead efficiency variance for the month is $1,155 U (rounded to nearest dollar). Option C is the correct answer.

The Following Standards for Variable Manufacturing Overhead Have Been Established