Question

Dirickson Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. Inputs Standard Quantity or Hours per Unit of Output Standard Price or Rate Direct materials 7.6 ounces $ 9.40 per ounce Direct labor 0.10 hours $ 18.00 per hour Variable manufacturing overhead 0.10 hours $ 5.30 per hour The company has reported the following actual results for the product for July: Actual output 7,600 units Raw materials purchased 63,000 ounces Actual cost of raw materials purchased $ 541,800 Raw materials used in production 57,750 ounces Actual direct labor-hours 820 hours Actual direct labor cost $ 16,072 Actual variable overhead cost $ 4,592 The variable overhead efficiency variance for the month is closest to: Multiple Choice $336 F $318 F $336 U $318 U

Answer 1

Answer:

The correct answer is D.

Explanation:

Giving the following information:

Variable manufacturing overhead is applied to products based on direct labor-hours. Variable manufacturing overhead 0.10 hours $ 5.30 per hour.

Actual direct labor-hours 820 hours

Actual variable overhead cost $ 4,592

variable overhead efficiency variance= (SQ - AQ)*SR

variable overhead efficiency variance= (7,600*0.10 - 820)*5.3= $318 unfavorable