Assume the following information appears in the standard cost card for a company that makes only one product:     Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 5 pounds $ 11.00 per pound $ 55.00 Direct labor 2 hours $ 17.00 per hour $ 34.00 Variable manufacturing overhead 2 hours $ 3.80 per hour $ 7.60 During the most recent period, the following additional information was available: 20,000 pounds of material was purchased at a cost of $10.50 per pound. All of the material that was purchased was used to produce 3,900 units. 8,000 direct labor-hours were recorded at a total cost of $132,000. The actual variable overhead cost incurred during the period was $25,000. Assuming the company uses direct labor-hours to compute its predetermined overhead rate, what is the variable overhead efficiency variance?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Assume the following information appears in the standard cost card for a company that makes only one product:
 

  Standard Quantity or Hours Standard Price or Rate Standard Cost
Direct materials 5 pounds $ 11.00 per pound $ 55.00
Direct labor 2 hours $ 17.00 per hour $ 34.00
Variable manufacturing overhead 2 hours $ 3.80 per hour $ 7.60


During the most recent period, the following additional information was available:

  • 20,000 pounds of material was purchased at a cost of $10.50 per pound.
  • All of the material that was purchased was used to produce 3,900 units.
  • 8,000 direct labor-hours were recorded at a total cost of $132,000.
  • The actual variable overhead cost incurred during the period was $25,000.


Assuming the company uses direct labor-hours to compute its predetermined overhead rate, what is the variable overhead efficiency variance?

Assume the following information appears in the standard cost card for a company that makes only one product:
Standard
Quantity
Standard Price or
Standard
or Hours
Rate
Cost
$ 55.00
$ 34.00
$ 7.60
Direct materials
5 pounds $ 11.00 per pound
$ 17.00 per hour
$ 3.80 per hour
Direct labor
2 hours
Variable manufacturing overhead
2 hours
During the most recent period, the following additional information was available:
• 20,000 pounds of material was purchased at a cost of $10.50 per pound.
All of the material that was purchased was used to produce 3,900 units.
• 8,000 direct labor-hours were recorded at a total cost of $132,000.
The actual variable overhead cost incurred during the period was $25,000.
Assuming the company uses direct labor-hours to compute its predetermined overhead rate, what is the variable overhead efficiency variance?
Multiple Choice
$760 U
$785 F
$760 F
$785 U
Transcribed Image Text:Assume the following information appears in the standard cost card for a company that makes only one product: Standard Quantity Standard Price or Standard or Hours Rate Cost $ 55.00 $ 34.00 $ 7.60 Direct materials 5 pounds $ 11.00 per pound $ 17.00 per hour $ 3.80 per hour Direct labor 2 hours Variable manufacturing overhead 2 hours During the most recent period, the following additional information was available: • 20,000 pounds of material was purchased at a cost of $10.50 per pound. All of the material that was purchased was used to produce 3,900 units. • 8,000 direct labor-hours were recorded at a total cost of $132,000. The actual variable overhead cost incurred during the period was $25,000. Assuming the company uses direct labor-hours to compute its predetermined overhead rate, what is the variable overhead efficiency variance? Multiple Choice $760 U $785 F $760 F $785 U
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Follow-up Question

 

Assume the following information appears in the standard cost card for a company that makes only one product:

  Standard Quantity or Hours Standard Price or Rate Standard Cost
Direct materials 5 pounds $ 11.00 per pound $ 55.00
Direct labor 2 hours $ 17.00 per hour $ 34.00
Variable manufacturing overhead 2 hours $ 3.00 per hour $  6.00

During the most recent period, the following additional information was available:

  • 20,000 pounds of material was purchased at a cost of $10.50 per pound.
  • All of the material that was purchased was used to produce 3,900 units.
  • 8,000 direct labor-hours were recorded at a total cost of $132,000.
  • The actual variable overhead cost incurred during the period was $25,050.

Assuming the company uses direct labor-hours to compute its predetermined overhead rate, what is the variable overhead rate variance?

 

Multiple Choice
  •  
    $1,650 F
  •  
    $1,650 U
  •  
    $1,050 U
  •  
    $1,050 F
 
 
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