Zacher Corporation makes a product with the following standards for direct labor
ID: 2564642 • Letter: Z
Question
Zacher Corporation makes a product with the following standards for direct labor and variable overhead:
In February, the company's budgeted production was 4,400 units, but the actual production was 4,650 units. The company used 1,230 direct labor-hours to produce this output. The actual variable overhead cost was $13,131. The company applies variable overhead on the basis of direct labor-hours.
The variable overhead efficiency variance for February is:
a. $1,690 F
b. $1,650 F
c. $1,690 U
d. $1,650 U
Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct labor 0.3 hours $24.00 per hour $7.20 Variable overhead 0.3 hours $10.00 per hour $3.00Explanation / Answer
Answer is Option b. $ 1,650 F VOH efficiency variance AH (a) SH (b) Variance (c=b-a) SR (d) Total variance (e=c*d) F/U VOH efficiency variance = (AH-SH)*SR AH = Actual hours = 1,230 SH = Standard Hours = 4,650 Units * 0.3 Hours = 1,395 SR = Standard Rate per hour = $ 10 F= Favourable U = Unfavourable VOH efficiency variance AH (a) SH (b) Variance (c=b-a) Price (d) Total variance (e=c*d) F/U 1,230 1,395 165 10 1,650 F
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