Juhasz Corporation makes a product with the following standards for direct labor

Question

Juhasz Corporation makes a product with the following standards for direct labor and variable overhead:

In August the company produced 9,600 units using 6,850 direct labor-hours. The actual variable overhead cost was $36,990. The company applies variable overhead on the basis of direct labor-hours.

The variable overhead efficiency variance for August is:

Multiple Choice

$702 U

$741 U

$702 F

$741 F

Standard Quantity or Hours Standard Price or Rate Direct labor 0.70 hours $ 37.00 per hour Variable overhead 0.70 hours $ 5.70 per hour

Explanation / Answer

Variable overhead efficiency variance = 5.7*(6850-9600*0.7)= 741 U Option 2 is correct

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