The following standards for variable overhead have been established for a compan
ID: 2348247 • Letter: T
Question
The following standards for variable overhead have been established for a company that makes only one product:Standard hours per unit of output: 4.5 hours
Standard variable overhead rate: $16.00 per hour
The following data pertain to operations for the last month:
Actual hours: 8,200 hours
Actual total variable overhead cost: $125,000
Actual output: 1,810 units
What is the variable overhead rate variance for the month? (F or U)
What is the variable overhead efficiency variance for the month? (F or U)
Explanation / Answer
1) Material Quantity (or usage) variance - Stnd quantity per unit x units produced (5.1 g x 1,000) = 5,100 vs Actual usage 6,300 = 1,200 g x Stnd price of 11.95 = 14,340 Unfav Matl Quantity 2) Labor Efficiency variance - Stnd hrs x units produced (5 x 1,400) = 7,000 vs Actual hrs 7,300 = 300 hrs x Stnd rate of 19.85 = 5,955 Unfav Labor Efficiency 3) Variable OH Efficiency variance - Stnd hrs x units produced (6.3 x 1,100) = 6,930 vs Actual hrs 8,600 = 1,670 hrs x Stnd OH rate of 18.65 = 31,145.50 Unfav Var OH Efficiency