Zacher Corporation makes a product with the following standards for direct labor and variable overhead: In February the company's budgeted production was 6,900 units,but the actual production was 7,000 units.The company used 1,980 direct labor-hours to produce this output.The actual variable overhead cost was $10,296.The company applies variable overhead on the basis of direct labor-hours. The variable overhead efficiency variance for February is:

Question

Zacher Corporation makes a product with the following standards for direct labor and variable overhead:  In February the company's budgeted production was 6,900 units,but the actual production was 7,000 units.The company used 1,980 direct labor-hours to produce this output.The actual variable overhead cost was $10,296.The company applies variable overhead on the basis of direct labor-hours. The variable overhead efficiency variance for February is:

Quizplus · Accepted Answer

SH = 7,000 units × 0.3 hours per unit = 2,100 hours
Variable overhead efficiency variance = (AH - SH)× SR
= (1,980 hours - 2,100 hours)× $5.00 per hour
= (-120 hours)× $5.00 per hour
= $600 F

Zacher Corporation Makes a Product with the Following Standards for Direct