Ledezma Corporation makes a product with the following standards for direct labo

Question

Ledezma Corporation makes a product with the following standards for direct labor and variable overhead: Standard Quantity or Hours Standard Price or Rate Direct labor 0.5 hours $11.00 per hour Variable overhead 0.5 hours $8.00 per hour 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: $328 F $328 U $320 F $320 U Please show your work. Thanks.

Explanation / Answer

Standard Hours = 2,500 units × 0.5 hours per unit = 1,250 hours

Variable overhead efficiency variance = (Actual Hours – Standard Hours) × Standard Rate = (1,210 hours 1,250 hours) × $8.00 per hour= (40 hours) × $8.00 per hour= $320 F

Hence, Answer is $320 F

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