Grub Chemical Corporation has developed cost standards for the production of its new cologne, ChocO. The variable cost standards below relate to each 10 gallon batch of ChocO:
Variable manufacturing overhead at Grub is applied based on direct labor-hours. The actual results for last month were as follows:

-What is ChocO's variable overhead efficiency variance?
A) $7,260 Unfavorable
B) $10,560 Favorable
C) $31,240 Unfavorable
D) $39,050 Unfavorable

Question

Grub Chemical Corporation has developed cost standards for the production of its new cologne, ChocO. The variable cost standards below relate to each 10 gallon batch of ChocO:
  Variable manufacturing overhead at Grub is applied based on direct labor-hours. The actual results for last month were as follows:
 
-What is ChocO's variable overhead efficiency variance?
A) $7,260 Unfavorable 
B) $10,560 Favorable 
C) $31,240 Unfavorable 
D) $39,050 Unfavorable

Quizplus · Accepted Answer

SH = 3,800 units × 1.25 hours per unit = 4,750 hours
Variable overhead efficiency variance = (AH − SH) × SR
= (4,510 hours − 4,750 hours) × $44.00 per hour
= (-240 hours) × $44.00 per hour
= $10,560 F

Grub Chemical Corporation Has Developed Cost Standards for the Production