Grant Parker, manager of Denver Company, wants to compute the variable overhead efficiency variance for the year. He has the following details: Variable overhead flexible budget variance (unfavorable) $47,250 Budgeted input quantity allowed for actual output 9,000 units Actual input quantity used of cost-allocation base used 10,125 units Budgeted variable overhead cost per unit of cost-allocation base $60 Actual variable overhead cost per unit of cost-allocation base $58 What will be the variable overhead efficiency variance for the year

$67,500 U

Explanation: (Variable overhead efficiency variance = (10,125 – 9,000) × $60 = $67,500 U) (Variable overhead efficiency variance = (Actual quantity of variable overhead cost-allocation base used for actual output – Budgeted quantity of variable overhead cost-allocation base allowed for actual output) × Budgeted variable overhead cost per unit of cost-allocation base)

$67,500 U

Explanation:

$67,500 U (The Variable overhead efficiency variance = (10,125 – 9,000) × $60 = $67,500 U)

(while the Variable overhead efficiency variance = {the Actual quantity of variable overhead cost-allocation base used for real output – Budgeted quantity of variable overhead cost- allocation base allowed for actual output} × Budgeted variable overhead cost per unit of cost-allocation base)

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