Question

Majer Corporation makes a product with the following standard costs: Standard Quantity or HoursStandard Price or RateStandard Cost Per Unit Direct materials 6.3ounces$4.00per ounce$25.20 Direct labor 0.9hours$14.00per hour$12.60 Variable overhead 0.9hours$4.00per hour$3.60 The company reported the following results concerning this product in February. Originally budgeted output 5,200units Actual output 5,900units Raw materials used in production 33,300ounces Actual direct labor-hours 2,050hours Purchases of raw materials 33,800ounces Actual price of raw materials$37.10per ounce Actual direct labor rate$27.60per hour Actual variable overhead rate$5.50per 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 overheads efficiency variance = $13,040  favorable  

Explanation:

Variable overheads efficiency variance is the difference between the standard hours of actual output and actual hours valued at the standard variable overhead rate per hour

                                                                                       Hours

5,900munits should have taken (5,900× 0.9)          5,310

but did take                                                                 2050          

efficiency variance in hours                                         3,260 favorable

Standard rate per hour                                                 $4.00  

Variable overheads efficiency variance                     13,040 favorable

Variable overheads efficiency variance = $13,040  favorable