Question

Termeer Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. Inputs Standard Quantity or Hours per Unit of Output Standard Price or Rate Variable manufacturing overhead 0.30 hours $2.30 per hour The company has reported the following actual results for the product for August: Actual output 8,000 units Actual direct labor-hours 2,380 hours Actual variable overhead rate $ 2.10 per hour Actual variable overhead cost $ 4,998 The variable overhead efficiency variance for the month is closest to:

Answer 1

Answer:

Variable overhead efficiency variance= $46 favorable

Explanation:

Giving the following information:

Variable manufacturing overhead 0.30 hours $2.30 per hour

$46 Actual output 8,000 units Actual direct labor-hours 2,380 hours

To calculate the variable overhead efficiency variance, we need to use the following formula:

Variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate

Standard quantity= 0.3*8,000= 2,400 hours

Variable overhead efficiency variance= (2,400 - 2,380)*2.3

Variable overhead efficiency variance= $46 favorable