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Pippin 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 5.0 grams $7.00 per gram
Direct labor 0.30 hours $21.30 per hour
Variable manufacturing overhead 0.30 hours $9.60 per hour
The company has reported the following actual results for the product for June:
Actual output 8,500 units
Raw materials purchased 48,100 grams
Actual price of raw materials $7.70 per gram
Raw materials used in production 42,490 grams
Actual direct labor-hours 2,300 hours
Actual direct labor rate $21,70 per hour
Actual variable overhead rate $9.80 per hour
The variable overhead efficiency variance for the month is closet to:_________.
a. $2,450 F
b. $2,400 U
c. $2,400 F
d. $2,450 U

Sagot :

Answer:

c. $2,400 F

Explanation:

The computation of the  variable overhead efficiency variance for the month is shown below:

= Variable manufacturing overhead per hour × (actual direct labor hours - actual output × 0.30 hours)

= $9.6 × (2,300 - 8,500 × 0.3)

= $2,400 Favorable

Hence, the correct option is c.

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