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In a period, there was a favourable variable overhead efficiency variance of $6,750. The
standard variable overhead absorption rate per hour was $3 and 15 hours were allowed for
each unit as standard. The actual hours worked were 21,750.
What was the number of units actually produced?Can you please go through the thought process of solving this?
If there is a favourable efficiency variance of $6,750 then they must have worked 6,750/3 = 2,250 fewer hours than they expected to work.
Therefore they expected to work 21,750 + 2,250 = 24,000 hours.
Since the standard hours per unit are 15, they must have produced 24,000/15 = 1,600 units.
Have you watched my free lectures on variance analysis?
Thanks for taking the time to reply.
I haven’t watched your videos since I was attending classes until last week.
I will watch them now, thanks
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