Evergreen Logistics operates fulfillment centers for online retailers. For each customer order processed, the standard time required is 0.05 direct labor hours, and the variable overhead rate is $6.50 per direct labor hour. During August, Evergreen processed 150,000 orders using 7,100 direct labor hours. The company incurred actual variable overhead costs of $45,500. Calculate the variable overhead efficiency variance for August.

Evergreen Logistics operates fulfillment centers for online retailers. For each customer order processed, the standard time required is 0.05 direct labor hours, and the variable overhead rate is $6.50 per direct labor hour. During August, Evergreen processed 150,000 orders using 7,100 direct labor hours. The company incurred actual variable overhead costs of $45,500. Calculate the variable overhead efficiency variance for August.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter10: Standard Costing And Variance Analysis

Section: Chapter Questions

Problem 58E: At the beginning of the year, Lopez Company had the following standard cost sheet for one of its...

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Case made 24,500 units during June, using 32,000 direct labor hours. They expected to use 31,450 hours per the standard cost card. Their employees were paid $15.75 per hour for the month of June. The standard cost card uses $15.50 as the standard hourly rate. A. Compute the direct labor rate and time variances for the month of June, and also calculate the total direct labor variance. B. If the standard rate per hour was $16.00, what would change?
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