Irving Corporation makes a product with the following standards for direct labor and variable overhead:
In November the company's budgeted production was 5,300 units, but the actual production was 5,100 units. The company used 1,650 direct labor-hours to produce this output. The actual variable overhead cost was $7,590. The company applies variable overhead on the basis of direct labor-hours.
-The variable overhead efficiency variance for November is:
A) $552 U
B) $600 U
C) $600 F
D) $552 F

Question

Irving Corporation makes a product with the following standards for direct labor and variable overhead:
  In November the company's budgeted production was 5,300 units, but the actual production was 5,100 units. The company used 1,650 direct labor-hours to produce this output. The actual variable overhead cost was $7,590. The company applies variable overhead on the basis of direct labor-hours.
-The variable overhead efficiency variance for November is:
A) $552 U 
B) $600 U 
C) $600 F 
D) $552 F

Quizplus · Accepted Answer

SH = 5,100 units × 0.3 hours per unit = 1,530 hours
Variable overhead efficiency variance = (AH - SH) × SR
= (1,650 hours − 1,530 hours) × $5.00 per hour
= (120 hours) × $5.00 per hour
= $600 U

Irving Corporation Makes a Product with the Following Standards for Direct