Asked by Murali Krishna on Apr 27, 2024
Verified
The variable overhead efficiency variance for October is:
A) $1,400 Favorable
B) $1,225 Unfavorable
C) $1,900 Unfavorable
D) $2,700 Favorable
Variable Overhead Efficiency Variance
The difference between actual and budgeted variable overhead costs, attributable to differences in productive efficiency.
Favorable
A term used in finance and accounting to describe a situation or variance that is better than expected or budgeted, often indicating profits or gains.
- Obtain knowledge on the intricacies and computation of variable overhead rate and efficiency variances.
Verified Answer
TH
Tahir HussainApr 28, 2024
Final Answer :
B
Explanation :
The variable overhead efficiency variance is calculated as (actual hours - standard hours) x standard rate. Substituting the given values, we get ($39,000/6,000 hours - 4 hours per unit) x $5 per hour = $1,225 unfavorable.
Explanation :
SH = 3,750 units × 1.4 hours per unit = 5,250 hours
Variable overhead efficiency variance = (AH − SH)× SR
= (5,600 hours − 5,250 hours)× $3.50 per hour
= (350 hours)× $3.50 per hour
= $1,225 U
Reference: CH09-Ref45
Pippin 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.
The company has reported the following actual results for the product for June: 
Variable overhead efficiency variance = (AH − SH)× SR
= (5,600 hours − 5,250 hours)× $3.50 per hour
= (350 hours)× $3.50 per hour
= $1,225 U
Reference: CH09-Ref45
Pippin 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.
The company has reported the following actual results for the product for June: 
Learning Objectives
- Obtain knowledge on the intricacies and computation of variable overhead rate and efficiency variances.