Highfill Corporation's variable overhead is applied on the basis of direct labor-hours. The standard cost card...

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: Calculate both the variable overhead rate variance and efficiency variance for the month.

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Expert Solution

Actual DATA for		800	Units
	Quantity (AQ)	Rate (AR)	Actual Cost
Variable Overhead	6800	$ 6.05	$ 41,140.00

Standard DATA for		800	Units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Variable Overhead	( 8.4 Direct labor hours x 800 Units)=6720 Direct labor hours	$ 5.60	$ 37,632.00

Variable Overhead Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$ 5.60	-	$ 6.05	)	x	6800
	$(3,060.00)
	Variance		$ 3,060.00			Unfavourable-U

Variable Overhead Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	6720	-	6800	)	x	$ 5.60
	$ (448.00)
	Variance		$ 448.00			Unfavourable-U

ekkarill92 answered 1 year ago

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