Underfoot Products Uses Standard Costing -
Compute the Variable Overhead Efficiency Variance

question 117

Multiple Choice

Underfoot Products uses standard costing. The following information about overhead was generated during May: $\begin{array}{c}\begin{array}{lrr} \text {Standard variable overhead rate } &\\ \text { Standard fixed overhead rate} &\\ \text { Actual variable overhead costs} &\\ \text { Actual fixed overhead costs} &\\ \text { Budgeted fixed overhead costs} &\\ \text { Standard machine hours per unit produced } &\\ \text { Good units prockuced } &\\ \text { Actual machine hours } \end{array}\begin{array}{lll} \text { \$ 2 per machine hours }\\ \text {\$ 1 per machine hours}\\\$ 390,000\\\$ 175,000 \\ \$ 190,000\\10\\18,000\\195,000 \end{array}\end{array}$

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Compute the variable overhead efficiency variance.

• A) $50000 (F)
• B) $50000 (U)
• C) $40000 (F)
• D) $30000 (U)

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Definitions:

Single Equivalent Discount Rate

A unified discount rate that equates to the net present value of all future cash flows from a project or investment.

Mark-up

The additional sum included in the goods' cost to cover overhead expenses and gain, represented as a portion of the total cost.

Selling Price

The amount of money for which a seller is willing to sell their product or service.

Cost

The amount that is spent to buy or produce something, including the resources and materials used.