Question

Majer Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 6.4 ounces $ 3.00 per ounce $ 19.20 Direct labor 0.4 hours $ 13.00 per hour $ 5.20 Variable overhead 0.4 hours $ 5.00 per hour $ 2.00 The company reported the following results concerning this product in February. Originally budgeted output 4,800 units Actual output 4,900 units Raw materials used in production 30,230 ounces Actual direct labor-hours 1,910 hours Purchases of raw materials 32,600 ounces Actual price of raw materials $ 2.90 per ounce Actual direct labor rate $ 12.40 per hour Actual variable overhead rate $ 4.90 per hour The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The variable overhead efficiency variance for February is:

Answer 1

Answer:

Variable overhead efficiency variance= $250 favorable

Explanation:

Giving the following information:

Standard:

Variable overhead 0.4 hours $ 5.00 per hour $ 2.00

Actual output= 4,900 units

Actual direct labor-hours 1,910 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= 0.4*4,900= 1,960

Variable overhead efficiency variance= (1,960 - 1,910)*5

Variable overhead efficiency variance= $250 favorable