Question

Reddy Corporation has collected the following data for the month of June: Actual total factory overhead incurred $61,150 Budgeted fixed factory overhead costs $40,700 Activity level, in direct labor hours 14,800 Actual direct labor hours 17,800 Standard hours for output this period 16,800 Total factory overhead rate $4.30 What is the variable overhead efficiency variance

Answer 1

Answer:

Variable overhead efficiency variance = $8,600 favorable

Explanation:

Variable overhead efficiency variance is the difference between the actual time taken to achieve a given production output less the standard hours for same multiplied by the standard variable overhead rate

Variable overhead efficiency variance is determined as follows:

                                                                                   Hours

standard hours for actual output                             16,800

Actual             hours                                                  14,800

Efficiency variance                                                    2,000 favorable

× standard variable OH rate                                   × $4.30

Variable overhead efficiency variance ($)               $8,600  favorable