Pleiss Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The compa variable manufacturing overhead rate is $2.40 per machine-hour. The actual variable manufacturing overhead cost for the month was $5,240. The original budget for the month was based on 2,100 machine-hours. The co hours during the month. The standard hours allowed for the actual output of the month totaled 2.280 machine-hours. What was the variable overhead efficiency variance for the month?

a. $232 Favorable
b. $208 Favorable
c. $24 Favorable
d. $432 Unfavorable

Question

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DeniceSandidge DeniceSandidge · Answer 1 · 2019-12-28T12:28:28+01:00

Answer:

Variable Overhead Efficiency Variance = $24 Favorable

so correct option is c. $24 Favorable

Explanation:

given data

variable manufacturing overhead rate = $2.40 per machine hour

actual variable manufacturing overhead cost = $5,240

original budget = 2,100 machine hours

actual output = 2.280 machine hours

to find out

variable overhead efficiency variance

solution

we know Standard Cost Per Hour that is

Standard Time = 2100 hours

Standard Rate = $2.40 per hour

Standard Cost per unit = 2100 × $2.40 = $5040

and

Standard Cost for actual output will be

Standard Time = 2280 hours

Standard Rate = $2.40 per hour

Standard Cost per unit = 2280 × $2.40 = $5472

so actual overhead expenses will be

Actual Time = 2270 hours

Actual Rate = $2.31 per hour

Actual Cost = $5240

so

Variable Overhead Efficiency Variance will be

Variable Overhead Efficiency Variance = (Standard Hours - Actual Hours) × Standard Variable Overhead Rate ....................1

Variable Overhead Efficiency Variance = ( 2280 - 2270 ) × $2.40

Variable Overhead Efficiency Variance = $24 Favorable

so correct option is c. $24 Favorable