Xero Company's standard factory overhead rate is $3.75 per direct labor hour (DLH),calculated at 90% capacity = 900 standard DLHs.In December,the company operated at 80% of capacity,or 800 standard DLHs.Budgeted factory overhead at 80% of capacity is $3,150,of which $1,350 is fixed overhead.For December,the actual factory overhead cost was $3,800 for 840 actual DLHs,of which $1,300 was for fixed factory overhead.Assuming the use of a two-way breakdown (decomposition)of the total overhead variance,what is the factory overhead efficiency variance for December?
A)N/A-this variance does not exist under a two-way breakdown of the total overead variance.
B)$90 unfavorable.
C)$150 unfavorable.
D)$225 favorable.
E)$425 unfavorable.

Question

Quizplus · Accepted Answer

In a two-way breakdown of total overhead variance, only spending and volume variances are calculated. Efficiency variance is not calculated in this method.

Xero Company's Standard Factory Overhead Rate Is $3