Lamp Light Limited (LLL) manufactures lampshades. It applies variable overhead o

Question

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 Stand Quantity Rate Unit Cost Variable manufacturing 0.6 S0.80$0.48 overhead During August, LLL had the following actual results Units produced and sold Actual variable overhead Actual direct labor hours 26,000 $ 9,560 16,700 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 Favorable/Overapplied and "U" for Unfavorable/Underapplied.) Variable Overhead Rate Variance Variable Overhead Efficiency Variance Variable Overhead Spending Variance

Explanation / Answer

Variable overhead rate variance = (standard rate-actual rate)actual hours

= (0.80*16700-9560)

Variable overhead rate variance = 3800 F

Variable overhead efficiency variance = (standard hours-actual hours)standard rate

= (26000*.60-16700)0.80

Variable overhead efficiency variance = 880 U

Variable overhead spending variance = (standard cost-actual cost)

= (26000*.48-9560)

Variable overhead spending variance = 2920 F

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