Fletcher Company collected the following data regarding production of one of its products. Compute the variable overhead efficiency variance.      Direct labor standard (2 hrs. @ $12.75/hr.)$25.50 per finished unitActual direct labor hours 81,500 hrs.Budgeted units 42,000 unitsActual finished units produced 40,000 unitsStandard variable OH rate (2 hrs. @ $14.30/hr.)$28.60 per finished unitStandard fixed OH rate ($336,000/42,000 units)$8.00 per unitActual cost of variable overhead costs incurred$1,140,000  Actual cost of fixed overhead costs incurred$338,000  

A. $4,000 favorable.
B. $14,300 unfavorable.
C. $21,450 favorable.
D. $4,000 unfavorable.
E. $21,450 unfavorable.


Answer: E

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Arca Incorporated makes a single product-a critical part used in commercial airline seats. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below:     Budgeted (Planned) Overhead:    Budgeted variable manufacturing overhead$38,700  Budgeted fixed manufacturing overhead 170,700  Total budgeted manufacturing overhead$209,400       Budgeted production (a) 20,000units Standard hours per unit (b) 1.50machine-hours Budgeted hours (a) × (b) 30,000machine-hours      Applying Overhead:    Actual production (a) 15,000units Standard hours per unit (b) 1.50machine-hours Standard hours allowed for the

actual production (a) × (b) 22,500machine-hours      Actual Overhead and Hours:    Actual variable manufacturing overhead$9,812  Actual fixed manufacturing overhead 185,700  Total actual manufacturing overhead$195,512  Actual hours 22,300machine-hours ?The total of the overhead variances is: A. $13,888 F B. $38,462 F C. $38,462 U D. $13,888 U

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