Air Fresh Industries uses a standard overhead costing system for the production of its EnergyPro cooling systems. Based on a capacity of 120,000 direct labor hours, the standard costs per unit of EnergyPro are applied to production as follows:
|
Variable overhead portion |
2 hours @ $16 _ $32 |
|
Fixed overhead portion |
2 hours @ $10 _ $20 |
During August, 30,000 units of EnergyPro were scheduled for production, but only 27,000 units were actually produced. Actual direct labor cost incurred was $885,600 for 55,350 actual hours of work. Actual variable overhead cost incurred was $863,450, and actual fixed overhead cost was $622,000.
The variable overhead efficiency variance was
a. $540 U.
b. $21,600 U.
c. $20,700 U.
d. $74,400 F.
e. $72,540 F.