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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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