A manufacturing company that has only one product has established the following

Question

A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on direct labor-hours. Standard hours per unit of output Standard variable overhead rate 3.00 DLHs $1 0.75 per DLH The following data pertain to operations for the last month: Actual direct labor-hours Actual total variable manufacturing overhead cost Actual output 9,600 DLHs $ 95,760 2,500 units What is the variable overhead efficiency variance for the month?

Explanation / Answer

Variable overhead eficiency variance =SR*(AH-SH) = 10.75*(9600-2500*3)= 22575 U Option 1 is correct

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