A company makes a single product and uses a standard costing system that applies

Question

A company makes a single product and uses a standard costing system that applies overhead on the basis of direct labor hours. For the most recent period, the VOH spending variance was $80,000 F, and the VOH Efficiency Variance was $100,000 U. The company budgeted making 4,800 units at 3.5 hours each with $924,000 of VOH. The company actually produced 4,000 units. How many direct labor hours were used?

A company makes a single product and uses a standard costing system that applies overhead on the basis of direct labor hours. For the most recent period, the VOH spending variance was $100,000 F, and the VOH Efficiency Variance was $50,000 U. The company budgeted making 4,800 units at 3.5 hours each with $924,000 of VOH. The company actually produced 4,000 units. What was the actual VOH

Explanation / Answer

VOH efficiency variance=100000U

Total Budgeted hours=4800*3.5=16800 hr

VOH=924000

SR=924000/16800=55

SH=4000*3.5=14000

According to problem

(14000-AH)55=-100000

AH=15818.18

2.Total VOH variance=100000-50000=50000

Actual VOH=(924000÷4800)*4000-50000=720000(Answer)

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