(Appendix 11A)The Dillon Corporation makes and sells a single product.Overhead costs are applied on the basis of standard direct labor-hours.The standard cost card shows that 5 direct labor-hours are required per unit.The Dillon Corporation had the following budgeted and actual data for March: The variable overhead efficiency variance for March is:
A)$12, 400 F
B)$6, 160 U
C)$12, 400 U
D)$6, 160 F

Question

(Appendix 11A)The Dillon Corporation makes and sells a single product.Overhead costs are applied on the basis of standard direct labor-hours.The standard cost card shows that 5 direct labor-hours are required per unit.The Dillon Corporation had the following budgeted and actual data for March:  The variable overhead efficiency variance for March is:
A)$12, 400 F 
B)$6, 160 U 
C)$12, 400 U 
D)$6, 160 F

Quizplus · Accepted Answer

Standard hours per unit = 154, 000 hours ÷ 30, 800 units = 5 hours per unit
SH = 33, 900 units × 5 hours per unit = 169, 500 hours
SR = $123, 200 ÷ 154, 000 hours = $0.80 per hour
Variable overhead efficiency variance = (AH - SH)× SR
= (161, 800 hours - 169, 500 hours)× $0.80 per hour
= (-7, 700 hours)× $0.80 per hour
= $6, 160 F

(Appendix 11A)The Dillon Corporation Makes and Sells a Single Product