on.coe r 10 Quiz Pippin Inc. has provided the following data concerning one of t
ID: 2580789 • Letter: O
Question
on.coe r 10 Quiz Pippin Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is i applied to products on the baus of direct labor-hours Quantity or Hours per Unit of Standard Price or Direct materials Direct labor Variable manufacturing overhead 5.0 grans e.38 hours 3e hou $ 7.00 per gran $21.30 per hour 5 9.60 per hour The company has reported the following actual results for the product for June 8,500 units 48,180 grans $ 7.79 per gran 42,490 grans 2,300 hours $ 21.70 per hour $ 9.80 per hour Actual output Actual price of raw materials Rau materials used in production Actual direct labor-hours Actual direct labor rate Actual variable overhead rate The variable overhead efficiency variance for the month is closest to: Multiple Choice $2.450 U $2.400 F 3 of 10 EEExplanation / Answer
Formula for variable overhead efficiency variance =
Standard overhead rate*(Standard hours for actual production-Actual hours for Actual production)
Variable overhead per unit=0.30 hours
Actual hours for production =2,300 hours.
Standard hours for actual production =8500 units * standard hours for variable overhead
=8,500 units * 0.30 hours
=2550 hours.
Substituting the values in the formula
Standard variable overhead absorption per hour =$9.60 per hour.
$9.60*(2550-2300)
=$2,400 favourable.
Answer is second option i.e., $2,400 F
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