Potters Limited Uses a Standard Costing System for All Its

Multiple Choice

Potters Limited uses a standard costing system for all its products. Potters Limited produces hand painted teapots. The standard direct labour time to paint one teapot is 1½ hours. Variable overhead is allocated to each teapot on the basis of £6 per labour hour. Budgeted production is 1,500 teapots per month with budgeted monthly labour hours of 2,250. In October, Potters Limited produced 1,480 teapots and incurred total variable overhead expenditure of £13,000. 2,205 labour hours were paid in October. What is the variable overhead efficiency variance for October?

A) £90 Favourable
B) £180 Favourable
C) £230 Favourable
D) £320 Favourable