Venus Company applies overhead based on direct labor hours.The variable overhead standard is 10 hours at $3.50 per hour.During October,Venus Company spent $157,600 for variable overhead.47,440 labor hours were used to produce 4,800 units.What is the variable overhead efficiency variance?
A)$8,440 favorable
B)$1,960 favorable
C)$10,400 favorable
D)$1,960 unfavorable

Question

Quizplus · Accepted Answer

The variable overhead efficiency variance is calculated as (Actual hours - Standard hours) x Standard rate. Standard hours = 4,800 units x 10 hours/unit = 48,000 hours. Actual hours = 47,440 hours. Variance = (47,440 - 48,000) x $3.50 = -560 x $3.50 = $1,960 favorable.

Venus Company Applies Overhead Based on Direct Labor Hours