Desue Corporation makes a product with the following standards for labor and variable overhead: The company budgeted for production of 6,500 units in December,but actual production was 6,300 units.The company used 610 direct labor-hours to produce this output.The actual variable overhead rate was $6.40 per hour.The company applies variable overhead on the basis of direct labor-hours. The variable overhead efficiency variance for December is:

Question

Desue Corporation makes a product with the following standards for labor and variable overhead:  The company budgeted for production of 6,500 units in December,but actual production was 6,300 units.The company used 610 direct labor-hours to produce this output.The actual variable overhead rate was $6.40 per hour.The company applies variable overhead on the basis of direct labor-hours. The variable overhead efficiency variance for December is:

Quizplus · Accepted Answer

SH = 6,300 units × 0.1 hours per unit = 630 hours
Variable overhead efficiency variance = (AH - SH)× SR
= (610 hours − 630 hours)× $7.00 per hour
= (−20 hours)× $7.00 per hour
= $140 F

Desue Corporation Makes a Product with the Following Standards for Labor