Question

The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 3.5 hours Standard variable overhead rate $ 15.20 per hour The following data pertain to operations for the last month: Actual hours 3,800 hours Actual total variable manufacturing overhead cost $ 59,090 Actual output 800 units What is the variable overhead efficiency variance for the month?

Answer 1

Answer:

$15,200 favorable

Explanation:

The formula to compute the variable overhead efficiency variance is shown below:

= (Actual direct labor hours - standard direct labor hours) × variable overhead per hour

where,  

Actual direct labor hours is 3,800 hours

And, the standard direct labor hours equal to

= 800 units × 3.5

= 2,800 hours

Standard variable overhead rate $ 15.20 per hour

Now put these values to the above formula  

So, the value would equal to

= (3,800 hours - 2,800 hours) × $15.20

= $15,200 favorable