US CMA Part 1 · Chapter 3 · Question 11 of 30
Variable overhead is applied at $4.80 per direct labor hour. Actual direct labor hours were 12,400 and standard hours allowed for actual output were 12,500. What is the variable overhead efficiency variance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) $480 favorable
Explanation
Efficiency variance = (actual hours - standard hours allowed) x standard rate = (12,400 - 12,500) x $4.80 = $480 favorable. It arises from efficient use of the allocation base (labor hours), not from overhead spending itself.
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