Question

Freytag Corporation's variable overhead is applied on the basis of direct labor-hours. The company has established the following variable overhead standards for product N06C:

Standard direct labor-hours		4.5	hours per unit of N06C
Standard variable overhead rate	$	4.50	per hour

The following data pertain to the most recent month's operations during which 2,000 units of product N06C were made:

Actual direct labor-hours worked		8,800
Actual variable overhead incurred	$	40,540

Required:

a. What was the variable overhead rate variance for the month?

b. What was the variable overhead efficiency variance for the month?

(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Answer 1