Problem: Tulip Company uses a standard costing system. Information for the month of June is as follows:
Actual overhead costs ($26,000 is fixed): $80,000
Direct labour:
Actual hours worked - 12,000 hours
Standard hours allowed for actual production - 10,000 hours
Average actual labour cost per hour - $18
The overhead rate is based on a normal volume of 12,000 direct labour hours. Standard cost data at 12,000 direct labour hours were as follows:
Variable overhead $48,000
Fixed overhead 24,000
Total overhead $72,000
Refer to Tulip Company. What is the variable overhead efficiency variance?
- $2,000 U
- $4,000 U
- $8,000 U
- $20,000 U