Question

The following standards for variable manufacturing overhead have been established for a company that makes only one product:
Standard hours per unit of output: 7.8 hours
Standard variable overhead rate: $12.55 per hour
Actual hours: 2,900 hours
Actual total variable manufacturing overhead cost: $36,975
Actual output: 200 units
What is the variable overhead efficiency variance for the month?
a. $17,397 U
b. $16,817 U
c. $312 F
d. $17,085 U

Answer 1

Answer:

b. $16,817 U

Explanation:

Calculation for What is the variable overhead efficiency variance for the month

Using this formula

Variable overhead Efficiency Variance= Standard Rate(Actual Hours - Budgeted Hours)

Let plug in the formula

Variable overhead Efficiency Variance= $12.55 per hour[2,900 hours-(7.8 hours*200 units)]

Variable overhead Efficiency Variance= $12.55 per hour*(2,900 hours-1,560 hours)

Variable overhead Efficiency Variance= $12.55 per hour*1,340 hours

Variable overhead Efficiency Variance=$16,817U

Therefore the variable overhead efficiency variance for the month will be $16,817U