A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on direct labor-hours.
The following data pertain to operations for the last month:

-The variable overhead efficiency variance for July is:
A) $600 U
B) $540 U
C) $540 F
D) $600 F

Question

A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on direct labor-hours.
  The following data pertain to operations for the last month:
 
-The variable overhead efficiency variance for July is:
A) $600 U 
B) $540 U 
C) $540 F 
D) $600 F

Quizplus · Accepted Answer

Total variable overhead spending variance = Variable overhead rate variance + Variable overhead efficiency variance
$2,310 U = $1,710 U + Variable overhead efficiency variance
Variable overhead efficiency variance = $2,310 U - $1,710 U = $600 U

A Manufacturing Company That Has Only One Product Has Established