Talon Company

In June, Talon Company made 4,500 units of its product. Talon uses a standard cost system and applies overhead cost based on direct labor hours.

Standard:	-
DLH per unit	2.00
Variable overhead per DLH	$2.15
Fixed overhead per DLH	$3.10
Budgeted variable overhead	$21,875
Budgeted fixed overhead	$38,750
-	-
Actual:
Direct labor hours	10,000
Variable overhead	$19,750
Fixed overhead	$38,000

Using the four-variance approach, what is the variable overhead efficiency variance?

1. $2,150.00 U

2. $2,187.50 F

3. $400.00 U

4. $2,187.50 U