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direct labor, variable overhead price, efficiency variance

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The records of the Penney Company show the following for February:

Standard Labor hours allowed per unit of output 1.5
Standard variable overhead rate per
standard direct labor hour $30
Good units produced 60,000
Actual direct labor hours worked 92,000
Actual total direct labor $ 1,975,000
Direct labor efficiency variance $40,000 U
Actual variable overhead $2,560,000

REQUIRED:

Compute the direct labor and variable overhead price and efficiency variances.

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Solution Summary

I created a diagram in excel so you have a template for future work and so you have a visual that helps you to see the key to unlocking this puzzle (noticing the ratio of standard rates between VOH and labor). Computations are in cells (click to see).

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I created a diagram in excel so you have a ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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