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