Answer (B) is correct . The variable overhead efficiency variance equals the standard variable overhead rate times the difference between the actual input and the standard input allowed for the actual output. The standard rate for variable overhead is $2 per direct labor hour. Actual direct labor hours are 24,500. Standard labor hours are 24,000 (8,000 units × 3 hours per unit). Thus, the variable overhead efficiency variance is $1,000 [2 × (24,500 – 24,000)]. The variance is unfavorable because actual hours exceeded standard hours.
Answer (A) is incorrect because An unfavorable variable overhead efficiency variance exists.
Answer (C) is incorrect because The total variable overhead variance (actual overhead minus the overhead rate applied to the standard hours) is $2,000.
Answer (D) is incorrect because The difference between actual variable overhead and the product of the standard rate and the actual input (the variable overhead spending variance) is $3,000. This variance is favorable.
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Tray’s variable overhead efficiency variance is
