50) The following standards for variable manufacturing overhead have been establ

Question

50) The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output Standard variable overhead rate 8.1 hours 14.85 per hour S The following data pertain to operations for the last month: Actual hours 8,600hours s 130.720 Actual total variable manufacturing overhead cost Actual output 1,000units What is the variable overhead efficiency variance for the month? A) $7,600 U B) S7,600 F C) $2,835 F D) $7,425 U

Explanation / Answer

Variable overhead efficiency variance = (Standard hours - Actual hours) x Standard overhead rate
= {(1000 x 8.1) - 8,600 ) x $14.85
= (8,100 - 8,600) x $14.85
= -500 x $14.85
= $7,425 U

Option D) $7,425 U is correct answer.

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