Opal Production Company uses a standard costing system.The following information pertains to the current year:
The factory overhead rate is based on an activity level of 12,000 hours.Standard cost data for 6,000 units is as follows:

What is the variable overhead efficiency variance for Opal Production Company?
A) $540 F
B) $980 U
C) $750 U
D) $820 F

Question

Opal Production Company uses a standard costing system.The following information pertains to the current year:  
 The factory overhead rate is based on an activity level of 12,000 hours.Standard cost data for 6,000 units is as follows:
 
 What is the variable overhead efficiency variance for Opal Production Company?
A) $540 F 
B) $980 U 
C) $750 U 
D) $820 F

Quizplus · Accepted Answer

Variable overhead efficiency variance = (Actual hours - Standard hours) × Standard variable overhead rate = (10,000 - 9,500) × ($18,000 / 12,000) = $750 U

Opal Production Company Uses a Standard Costing System