Question

Fluegge Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. Inputs Standard Quantity or Hours per Unit of Output Standard Price or Rate Direct materials 5.7 liters $ 5.40 per liter Direct labor 0.70 hours $ 20.60 per hour Variable manufacturing overhead 0.70 hours $ 5.50 per hour The company has reported the following actual results for the product for December: Actual output 4,100 units Raw materials purchased 25,100 liters Actual price of raw materials $ 4.80 per liter Actual cost of raw materials purchased $ 120,480 Raw materials used in production 23,360 liters Actual direct labor-hours 2,700 hours Actual direct labor rate $ 21.20 per hour Actual direct labor cost $ 57,240 Actual variable overhead rate $ 5.90 per hour Actual variable overhead cost $ 15,930 The variable overhead efficiency variance for the month is closest to:

Answer 1

• Variable Overhead efficiency Variance
  = $ 935 Favourable

Variable Overhead Efficiency Variance
(	Standard Hours = 4100 units x 0.70 hrs	-	Actual Hours	)	x	Standard Rate
(	2870	-	2700	)	x	$                           5.50
	935
	Variance		$                  935.00			Favourable-F