Tharaldson Corporation makes a product with the following st

Tharaldson Corporation makes a product with the following standard costs Standard Standard Quantity or Standard Price or Cost Per Rate Unit Direct materials Direct labor Variable overhead Hours 5.6 ounces 0.3 hours 0.3 hours 3.00 per ounce $16.80 3.00 $ 2.10 $10.00 per hour $ 7.00 per hour The company reported the following results concerning this product in June Originally budgeted output Actual output Raw materials used in production Purchases of raw materials Actual direct labor-hours Actual cost of raw materials purchases Actual direct labor cost Actual variable overheadcost 4,000 units 4,000 units 20,600 ounces 21,700 ounces 540 hours $ 42,700 $ 14,000 $ 4,000 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:

Solution

B. $4,620 F

SH = 4,000 units × 0.3 hours per unit = 1,200 hours

Variable overhead efficiency variance = (AH ? SH) SR

= (540 hours ? 1,200 hours) $7 per hour

= $4,620 F