Gina Production Company Uses a Standard Costing System The Factory Overhead Rate Is Based on an Activity Level

question 16

Multiple Choice

Gina Production Company uses a standard costing system.The following information pertains to the current year. $\begin{array}{llr} \text { Actual factory overhead costs \( (\$ 16,500 \) is fixed) } &\$10,125\\ \text { Actual direct labour costs (11,250 hours) } &\$131,625\\ \text { Standard direct labour for 5,500 units: } &\\ \text {Standard hours allowed } &11,000 \text {hours}\\ \text { Labour rate } &\$12.00\\\end{array}$
The factory overhead rate is based on an activity level of 10,000 units.Standard cost data for 5,000 units is as follows:
$\begin{array}{lr}\text { Variable factory overhead } & \$ 22,500 \\\text { Fixed factory overhead } & \underline{13,500} \\\text { Total factory overhead } & \underline{\$ 36,000} \\\end{array}$ What is the variable overhead efficiency variance for Gina Production Company?

• A)$562.50 (F)
• B)$562.50 (U)
• C)$1,687.50 (F)
• D)$3,000.00 (U)

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