Glendale Brands Company uses standard costs for its manufacturing division. Stan

Question

Glendale Brands Company uses standard costs for its manufacturing division. Standards specify 0.1 direct labor hours per unit of product. At the beginning of the year, the static budget for variable overhead costs included the following data: Production volume 6,000 units Budgeted variable overhead costs$13,500 Budgeted direct labor hours (DLHr) 600 hours At the end of the year, actual data were as follows: Production volume4,200 units Actual variable overhead costs$15,200 Actual direct labor hours (DLHr) 505 hours What is the variable overhead efficiency variance? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

Explanation / Answer

SR x SH

SR x AH

AR x AH

22.50 x 420

22.50 x 505

15,200

9,450

11,362.50

15,200

1)SR= budgeted VOH/budgeted hours =13,500/600=$22.50

Standard time to produce one unit is =0.1/1 x 60=6 minutes.

2)SH=Standard hours required for actual production=(4,200units x 6mins )/60(mins per hr)=420 Hrs

Variable OHs efficiency variance=(SRSH)-(SRAH)

                                                                =-$1912.5 (Unfavourable)

ARAH=Actual variable cost

AH =actual hours

SR x SH

SR x AH

AR x AH

22.50 x 420

22.50 x 505

15,200

9,450

11,362.50

15,200

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