Descamps 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 Standard Price or Rate

per Unit of Output

Variable manufacturing overhead 0.20 hours $6.10 per hour

The company has reported the following actual results for the product for July:

Actual output 4,200 units

Actual direct labor-hours 780 hours

Actual variable overhead rate $ 6.20 per hour

The variable overhead efficiency variance for the month is closest to:

Multiple Choice:

O $366 F

O $372 U

O $372 F

O $366 U

Question

Chessie

Business

2 February, 09:10

Descamps 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 Standard Price or Rate

per Unit of Output

Variable manufacturing overhead 0.20 hours $6.10 per hour

The company has reported the following actual results for the product for July:

Actual output 4,200 units

Actual direct labor-hours 780 hours

Actual variable overhead rate $ 6.20 per hour

The variable overhead efficiency variance for the month is closest to:

Multiple Choice:

O $366 F

O $372 U

O $372 F

O $366 U

+2

Answers (1)

Know the Answer?

Xander Marshall · Answer 1

Option (A) is correct.

Explanation:

Actual output = 4,200 units

Actual direct labor-hours = 780 hours

Actual variable overhead rate = $6.20 per hour

Variable overhead efficiency variance

= (SLH - ALH) * SR

where,

SLH = Standard labor hour

ALH = Actual direct labor hours

SR = Standard Rate per Unit of Output

= [ (4,200 * 0.20) - 780] * 6.10

= (840 - 780) * 6.10

= 366 Favorable