Ledezma Corporation makes a product with the following standards for direct labor and variable overhead: In May the company produced 2, 500 units using 1, 210 direct labor-hours.The actual variable overhead cost was $9, 922.The company applies variable overhead on the basis of direct labor-hours. The variable overhead efficiency variance for May is:

Question

Ledezma Corporation makes a product with the following standards for direct labor and variable overhead:  In May the company produced 2, 500 units using 1, 210 direct labor-hours.The actual variable overhead cost was $9, 922.The company applies variable overhead on the basis of direct labor-hours. The variable overhead efficiency variance for May is:

Quizplus · Accepted Answer

SH = 2, 500 units × 0.5 hours per unit = 1, 250 hours
Variable overhead efficiency variance = (AH - SH)× SR
= (1, 210 hours - 1, 250 hours)× $8.00 per hour
= (-40 hours)× $8.00 per hour
= $320 F

Ledezma Corporation Makes a Product with the Following Standards for Direct