Question

Tharaldson Corporation makes a product with the following standard costs:

	Standard Quantity or Hours			Standard Price or Rate			Standard Cost Per Unit
Direct materials		6.4	ounces	$	3.00	per ounce	$	19.20
Direct labor		0.3	hours	$	10.00	per hour	$	3.00
Variable overhead		0.3	hours	$	5.00	per hour	$	1.50

The company reported the following results concerning this product in June.

Originally budgeted output		3,200	units
Actual output		2,600	units
Raw materials used in production		20,200	ounces
Purchases of raw materials		21,300	ounces
Actual direct labor-hours		460	hours
Actual cost of raw materials purchases	$	45,200
Actual direct labor cost	$	13,200
Actual variable overhead cost	$	3,600

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 June is:

Garrison 16e Rechecks 2017-10-31

Multiple Choice

$1,696 F

$1,600 U

$1,696 U

$1,600 F

Answer 1

Tharaldson Corporation makes a product with the following standard costs:

	Standard Quantity or Hours			Standard Price or Rate			Standard Cost Per Unit
Direct materials		6.4	ounces	$	3.00	per ounce	$	19.20
Direct labor		0.3	hours	$	10.00	per hour	$	3.00
Variable overhead		0.3	hours	$	5.00	per hour	$	1.50

The company reported the following results concerning this product in June.

Originally budgeted output		3,200	units
Actual output		2,600	units
Raw materials used in production		20,200	ounces
Purchases of raw materials		21,300	ounces
Actual direct labor-hours		460	hours
Actual cost of raw materials purchases	$	45,200
Actual direct labor cost	$	13,200
Actual variable overhead cost	$	3,600
CALCULATE LABOUR EFFICIENCY VARIANCE : Labour effciency variance = (standard hours-actual hours)standard rate = (2600*0.3-460)10 Labour efficiency variance = 3200 F so answer is d) $3200 F