Fluegge Inc. has provided the following deta concerning one of the products in i

Question

Fluegge Inc. has provided the following deta concerning one of the products in its standard cost system. Variable manufecturing overhead is applied to products on the basis of direct labor-hours. Standard Quantity or Hours per Unit Standard Price or of Output 5.7 liters Direct materials Direct labor Variable manufacturing overhead 5.40 per liter $20.60 per hour $5.50 per hour 0.70 hours 0.70 hours The company has reported the following actual resulits for the product for December Actual output Raw materials purchased Actual price of raw materials Actual cost of raw materials purchased Raw materials used in production Actual direct labor-hours Actual direct labor rate Actual direct labor cost Actual variable overhead rate Actual variable overhead cost 4,100 units 25,100 liters $ 4.80 per liter $120,480 23,360 1iters 2,700 hours $ 21.20 per hour 57,240 $ 5.90 per hour 15,930 The varlable overhead efficiency variance for the month is closest to Multiple Choice

Explanation / Answer

SOLUTION

Variable overhead Efficiency variance = $935 (F)

Variable overhead Efficiency variance = (Actual hours - Standard hours) * Standard rate

= [2,700 hours - (4,100 * 0.70 hours)] * $5.50 per hour

= (2,700 - 2,870)* $5.50 per hour

= $935 (F)

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