Majer Corporation makes a product with the following standard costs: The company

Question

Majer Corporation makes a product with the following standard costs:

The company reported the following results concerning this product in February.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The variable overhead efficiency variance for February is:

Garrison 16e Rechecks 2017-10-31

rev: 04_13_2018_QC_CS-124401

Multiple Choice

$8,760 U

$8,755 F

$8,760 F

$8,755 U

Standard Quantity
or Hours Standard Price or
Rate Standard Cost Per Unit Direct materials 6.5 ounces $ 4.00 per ounce $ 26.00 Direct labor 0.5 hours $ 16.00 per hour $ 8.00 Variable overhead 0.5 hours $ 4.00 per hour $ 2.00

Explanation / Answer

Variable overhead efficiency variance = (Standard hour-actual hour)Standard rate

= (8300*.50-1960)*4

Variable overhead efficiency variance = 8760 F

So answer is c) $8760 F

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