Porter Company uses standard costs for its manufacturing division.Standards specify 0.1 direct labor hours per unit of product.The allocation base for variable overhead costs is direct labor hours.At the beginning of the year,the static budget for variable overhead costs included the following data:

At the end of the year,actual data were as follows:

What is the variable overhead efficiency variance? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

Question

Porter Company uses standard costs for its manufacturing division.Standards specify 0.1 direct labor hours per unit of product.The allocation base for variable overhead costs is direct labor hours.At the beginning of the year,the static budget for variable overhead costs included the following data:

At the end of the year,actual data were as follows:

What is the variable overhead efficiency variance? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

Quizplus · Accepted Answer

B)Variable overhead efficiency variance = (Actual quantity - Standard quantity)× Standard cost
Variable overhead efficiency variance = (500 DLHr - 410 DLHr)× $26.67 per direct labor hour = $2400 Unfavorable
Note:
Standard quantity or standard direct labor hours for 4100 units = 4100 units × 0.1 direct labor hour per unit = 410 direct labor hours
Standard cost per direct labor hour = Budgeted variable overhead costs / Budgeted direct labor hours = $16,000 / 600 direct labor hours = $26.67 per direct labor hour

Porter Company Uses Standard Costs for Its Manufacturing Division