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4 August, 21:48

Bulluck Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 5.10 grams $ 2.60 per gram Direct labor 0.60 hours $ 27.00 per hour Variable overhead 0.60 hours $ 3.60 per hour The company reported the following results concerning this product in July. Actual output 4,600 units Raw materials used in production 12,970 grams Actual direct labor-hours 2,500 hours Purchases of raw materials 13,700 grams Actual price of raw materials purchased $ 2.80 per gram Actual direct labor rate $ 13.00 per hour Actual variable overhead rate $ 3.70 per hour 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 July is:

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  1. 5 August, 00:55
    0
    The correct answer is $936 favorable.

    Explanation:

    According to the scenario, the computation of the given data are as follows:

    we can calculate the variable overhead efficiency variance by using following formula:

    Variable OH efficiency variance = (Actual Hours - Standard Hours) * Standard Rate

    Where,

    Standard hours = 4,600 * 0.60 = 2,760

    By putting the data, we get

    Variable OH efficiency variance = (2,500 - 2,760) * $3.60

    = - $936 (negative sign shows favorable)

    = $936 Favorable
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