E9-11 Calculating Variable Manufacturing Overhead Variances [LO 9-5] Lamp Light

Question

E9-11 Calculating Variable Manufacturing Overhead Variances [LO 9-5] Lamp Light Limited (LLL) manufactures lampshades. It applies variable overhead on the basis of direct labor hours. Information from LLL's standard cost card follows: Standard Standard Standard QuantityRate Unit Cost 0.6 $0.80 $048 Variable manufacturing overhead During August?LLL had the following actual results: Units produced and sold Actual variable overhead Actual direct labor hours 24,600 S 9,450 15,600 Required Compute LLL's variable overhead rate variance, variable overhead efficiency variance, and over-or underapplied variable overhead. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for FavorablelOverapplied and "U" for Unfavorable/Underapplied.) Variable Overhead Rate Variance Variable Overhoad Variable Overhoad Spending Variance Efficiency Variance

Explanation / Answer

Variable overhead rate variance = (0.8*15600-9450) = 3030 F

Variable overhead efficiency variance = (24600*.6-15600)*.80 = 672 U

Variable overhead spending variance = (24600*.48)-9450 = 2358 F

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