Pippin Inc. has products on the basis of direct labor-hours. the following data

Question

Pippin Inc. has products on the basis of direct labor-hours. the following data concerning one of the products in its standard cost system, Variable manufacturing overhead is applied to Standard Quantity or Hours per Unit of Output 5.0 grams 0.30 hours 0.30 hours Standard Price or Rate s 7.00 per gram $21.30 per hour $9.60 per hour Inputs Direct materials Direct labor variable manufacturing overhead The company has reported the following actual results for the product for June: Actual output Raw materials purchased Actual price of raw materials Raw materials used in production Actual direct labor-hours Actual direct labor rate Actual variable overhead rate 8,500 units 48,100 grams $ 7.70 per gram 42,490 grams 2,300 hours s 21.70 per hour 9.80 per hour The variable overhead efficiency variance for the month is closest to: S2.450 F

Explanation / Answer

Solution: 2400 (unfavorable)

Working:
Variable overhead efficiency variance = Standard rate × (Actual hours Standard hours)
9.60 ( 2300 - 2550) = -2400 (unfavorable)

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