Colina Production Company Uses a Standard Costing System The Factory Overhead Rate Is Based on an Activity Level

Multiple Choice

Colina Production Company uses a standard costing system. The following information pertains to the current year. Direct labor hours is the driver used to assign overhead costs to products. $\begin{array} { l } \text { Actual production}&5,500 units\\ \text {Actual factory overhead costs \( (\$ 16,500 \) is fixed) }&\$ 40,125 \\ \text {Actual direct labor costs ( 11,250 hours) }&\$ 131,625\\ \text {Standard direct labor for 5,500 units: }&\\ \text { Standard hours allowed}&11,000 hours\\ \text {Labor rate }&\$ 12.00\\\end{array}$


The factory overhead rate is based on an activity level of 10,000 direct labor hours.
Standard cost data for 5,000 units is as follows:

$\begin{array} { l } \text { Variable factory overhead}&\$22,500\\ \text {Fixed factory overhead }&13,500\\ \text {Total factory overhead }&\$36,000\\\end{array}$
What is the variable overhead efficiency variance for Colina Production Company?

A) $562.50 (F)
B) $3,000.00 (U)
C) $1,687.50 (F)
D) $562.50 (U)