Question

Scentsational Inc. produces a lavender air-freshener unit. They have developed standard costs for one unit as follows:

	Standard quantity or hours per unit	Standard price or rate	Standard cost
Direct materials	0.4 ounces	$12.50 per ounce	$5.00
Direct labor	2.1 dlh	$14.00 per dlh	$29.40
Variable manufacturing overhead	2.1 dlh	$3.50 per dlh	$7.35

During May, the following activities were recorded related to the production of the air-freshener:

a) The company purchased 14,550 ounces of direct materials at a unit cost of $13.50 per ounce.

b) There was no beginning inventory of direct materials, but there was ending inventory of 1,540 ounces.

c) The company’s production-line assemblers worked for 70,000 hours. They were paid a wage rate of $13.00 per hour.

e) Variable manufacturing overhead is allocated on the basis of direct labor hours. The total VMOH cost for the month was $210,000.

f) 35,000 units were produced and sold during May.

What was the variable manufacturing overhead efficiency variance for May?

Multiple Choice

• $47,250 F

• $3,500 F

• $49,000 F

• $12,250 F

Answer 1

Correct answer---------------$12,250 F

Working

Variable Overhead Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	73500	-	70000	)	x	$              3.50
	$         12,250.00
	Variance		$             12,250.00			Favourable-F

.

.

Standard DATA for 35,000 Units
	Quantity (SQ)
Variable Overhead	( 2.1 Hour x 35000 Units)=73500 Hour

answered by: anonymous