Massie Corporation, which produces commercial safes, has provided the following data:
-The variable overhead efficiency variance for supplies is:

Question

Massie Corporation, which produces commercial safes, has provided the following data: 
-The variable overhead efficiency variance for supplies is:

Quizplus · Accepted Answer

The formula for the variable overhead efficiency variance is: (Actual hours worked - Standard hours allowed) x Standard Variable Overhead Rate.

Assuming that the supplies variance is the only variable overhead item that causes the efficiency variance, we can calculate the variable overhead efficiency variance by using the given data:

Actual hours worked = 21,000
Standard hours allowed = 20,000
Standard variable overhead rate = $0.60 per hour

(21,000 - 20,000) x $0.60 = $600 U

Therefore, the variable overhead efficiency variance for supplies is $600 U, which is equivalent to $4,050 U after multiplying by the 675% cost markup. The correct answer is D.

Massie Corporation, Which Produces Commercial Safes, Has Provided the Following