Biery Corporation makes a product with the following standard costs: Standard qu

Question

Biery Corporation makes a product with the following standard costs:

                                                            Standard quantity or hours                                Standard price or rate

Direct materials                                                                   1.3 liters                                                 $6.00 per liter

Direct labor                                                                           0.6 hours                                               $19.00 per hour

Variable overhead                                                              0.6 hours                                               $3.00 per hour

The company produced 4,100 units in April using 5,380 liters of direct material and 2,610 direct labor-hours. During the month, the company purchased 6,000 liters of the direct material at $5.80 per liter. The actual direct labor rate was $19.80 per hour and the actual variable overhead rate was $2.90 per hour.

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 April is:

$435 F

$435 U

$450 U

$450 F

$435 F

$435 U

$450 U

$450 F

Explanation / Answer

Answer:Variable overhead efficiency variance=(Standard Hours-Actual Hours)Standard variable overhead rate

=(2460 hours*-2610 hours)*$3

=$450 U

Standard hours=41oo units*0.6 hours=2460 hours

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