Fordham Corporation produces a single product. The standard costs for one unit of its Concourse product are as follows: $ 3Direct materials (6 pounds at $0.50 per pound)Direct labor (2 hours at $10 per hour)Variable manufacturing overhead (2 hours at $5 per hour)2010Total33During November Year 2, 4,000 units of Concourse were produced. The costs associated with Novemberoperations were as follows:Material purchased (36,000 pounds at $0.60 per pound)Material used in production (28,000 pounds)Direct labor (8,200 hours at $9.75 per hour)Variable manufacturing overhead incurred$21,60079,95041,820What is the variable overhead efficiency variance for Concourse for November Year 2?1. $2,000 favorable.2. $2,000 unfavorable.3. $1,000 favorable.4. $1,000 unfavorable.

Following are the computation of variable overhead efficiency variance:

Answered: $ 3 Direct materials (6 pounds at $0.50…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Fordham Corporation produces a single product. The standard costs for one unit of its Concourse product are as follows:

$ 3
Direct materials (6 pounds at $0.50 per pound)
Direct labor (2 hours at $10 per hour)
Variable manufacturing overhead (2 hours at $5 per hour)
20
10
Total
33
During November Year 2, 4,000 units of Concourse were produced. The costs associated with November
operations were as follows:
Material purchased (36,000 pounds at $0.60 per pound)
Material used in production (28,000 pounds)
Direct labor (8,200 hours at $9.75 per hour)
Variable manufacturing overhead incurred
$21,600
79,950
41,820
What is the variable overhead efficiency variance for Concourse for November Year 2?
1. $2,000 favorable.
2. $2,000 unfavorable.
3. $1,000 favorable.
4. $1,000 unfavorable.

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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