Question
Lamp Light Limited (LLL) manufactures lampshades. It applies variable overhead on the basis of direct labor hours. Information from LLL's standard cost card follows: Standard
Lamp Light Limited (LLL) manufactures lampshades. It applies variable overhead on the basis of direct labor hours. Information from LLL's standard cost card follows:
Standard Quantity Standard Rate Standard Unit Cost
Variable manufacturing overhead 0.6 $0.80 $0.48
During August, LLL had the following actual results:
Units produced and sold 24,500
Actual variable overhead $ 9,440
Actual direct labor hours 15,500
Required:
Compute LLL's variable overhead rate variance, variable overhead efficiency variance, and over- or underapplied variable overhead. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for Favorable/Overapplied and "U" for Unfavorable/Underapplied.)
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