Answer:
$21,450 unfavorable.
Explanation:
Given:
Direct labor standard = 2 hrs @ $12.75/hr = $25.50
Actual direct labor hours = 81,500 hrs
Budgeted units = 42,000 units
Actual finished units produced = 40,000 units
Standard variable Overhead rate = (2 hrs. @ $14.30/hr.) = $28.60
Standard fixed OH rate = $8.00 per unit
Actual cost of variable overhead costs incurred = $1,140,000
Actual cost of fixed overhead costs incurred = $338,000
Now,
The standard hours for actual output
= Direct labor standard hours × Actual finished units produced
= 2 × 40,000
= 80,000 hours
now,
The variable overhead efficiency is calculated as:
= Standard variable OH rate × ( standard hours for actual output - Actual direct labor hours)
= $14.30/hr × ( 80,000 - 81,500 )
= - $21,450
here, negative sign depicts the unfavorable
Hence,
The answer is $21,450 unfavorable.
