Highfill Corporation's variable overhead is applied on the basis of direct labor-hours. The standard cost card for product D80D specifies 8.4 direct labor-hours per unit of D80D. The standard variable overhead rate is $5.60 per direct labor-hour. During the most recent month, 800 units of product D80D were made and 6,800 direct labor-hours were worked.The actual variable overhead incurred was $41,140.Required:a. What was the variable overhead rate variance for the month?b. What was the variable overhead efficiency variance for the month?

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Jonathan Cohen · Accepted Answer

Final Answer : a.Variable overhead rate variance = (Actual hours × Actual rate) − (Actual hours × Standard rate)= $41,140 − (6,800 hours × $5.60 per hour)= $41,140 − ($38,080)= $3,060 Unfavorableb.Variable overhead efficiency variance = (Actual hours − Standard hours*) × Standard rate= (6,800 hours − 6,720 hours*) × $5.60 per hour= (80 hours) × $5.60 per hour= $448 Unfavorable*Standard hours = Standard hours per unit × Actual output= 8.4 hours per unit × 800 units = 6,720 hours

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