Majer Corporation makes a product with the following standard costs: The company

Question

Majer Corporation makes a product with the following standard costs:

The company reported the following results concerning this product in February.

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 February is:

Standard Quantity
or Hours Standard Price or
Rate Standard Cost Per Unit Direct materials 6.3 ounces $ 2.00 per ounce $ 12.60 Direct labor 0.5 hours $ 10.00 per hour $ 5.00 Variable overhead 0.5 hours $ 4.00 per hour $ 2.00

Explanation / Answer

Answer:-

Variable overhead efficiency variance = (Standard rate – Actual rate) * Actual hours

                                       = ($4.00 per hour - $4.00 per hour)* 1900 hours   

                                       = NIL

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