Zero Company\'s standard factory overhead rate is $3.69 per direct labor hour (D
ID: 2482467 • Letter: Z
Question
Zero Company's standard factory overhead rate is $3.69 per direct labor hour (DLH), calculated at 88.00% capacity = 880 standard DLHs. In December, the company operated at 79.00% of capacity, or 790 standard DLHs. Budgeted factory overhead at 79.00% of capacity is $3,124, of which $1,357 is fixed overhead. For December, the actual factory overhead cost was $3,740 for 842 actual DLHs, of which $1,270 was for fixed factory overhead. Assuming the use of a four-way breakdown (decomposition) of the total overhead variance, what is the variable factory overhead efficiency variance for Zero Company in December? A) $139 unfavorable B) $116 unfavorable C) $755 unfavorable D) $587 unfavorable E) $87 favorable Zero Company's standard factory overhead rate is $3.69 per direct labor hour (DLH), calculated at 88.00% capacity = 880 standard DLHs. In December, the company operated at 79.00% of capacity, or 790 standard DLHs. Budgeted factory overhead at 79.00% of capacity is $3,124, of which $1,357 is fixed overhead. For December, the actual factory overhead cost was $3,740 for 842 actual DLHs, of which $1,270 was for fixed factory overhead. Assuming the use of a four-way breakdown (decomposition) of the total overhead variance, what is the variable factory overhead efficiency variance for Zero Company in December? A) $139 unfavorable B) $116 unfavorable C) $755 unfavorable D) $587 unfavorable E) $87 favorableExplanation / Answer
Variable budgeted variBle overhead rate = (3124 -1357)/ 790 = 1767 / 790 = $ 2.2367 per DLH
Variable efficicency variance= SR [ AH-SH]
= 2.2367 [ 842 - 790]
= 2.2367 * 52
= $ 116.31 U [Approx 116
correct option is "B"
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.