Berends Corporation makes a product with the following standard costs: The compa

Question

Berends Corporation makes a product with the following standard costs:

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

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:

Question options:

$240 F

$216 U

$216 F

$240 U

Standard Quantity or Hours Standard Price or Rate Direct materials 9.2 pounds $3.00 per pound Direct labor 0.3 hours $17.00 per hour Variable overhead 0.3 hours $3.00 per hour

Explanation / Answer

The variable overhead efficiency variance is the difference between the actual and budgeted hours worked, which are then applied to the standard variable overhead rate per hour. The formula is:

Standard overhead rate x (Actual hours - standard hours)
= Variable overhead efficiency variance

Actual hours=2560

standard hours=0.3*8800=2640

Variable overhead efficiency variance = 3*(2560-2640)= -240

So,answer is $240 F

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