Question

Derf Corporation uses a standard cost system in which it appliesmanufacturing overhead on the basis of standard direct labor-hours.Two direct labor-hours are required for each unit produced. Thedenominator activity was set at 12,600 units. Manufacturingoverhead was budgeted at $252,000 for the period; 20 percent ofthis cost was fixed. The 24,400 hours worked during the periodresulted in production of 11,500 units. Variable manufacturingoverhead cost incurred was $200,400 and fixed manufacturingoverhead cost was $50,500.

 

The variable overhead efficiency variance for the periodwas:

$100 Unfavorable

$5,200 Unfavorable

$11,200 Unfavorable

$4,400 Unfavorable

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