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The following standards for variable manufacturing overhead have been established for a company that makes only one product:

Standard hours per unit of output 7.0 hours
Standard variable overhead rate $ 13.40 per hour

The following data pertain to operations for the last month:

Actual hours 2,725 hours
Actual total variable manufacturing overhead cost $ 37,195
Actual output 150 units

What is the variable overhead efficiency variance for the month?

Respuesta :

facundobuzzetti

Answer:

variable overhead efficiency variance= $22,780 unfavorable

Explanation:

Giving the following information:

Standard hours per unit of output 7.0 hours

Standard variable overhead rate $ 13.40 per hour

Actual hours 2,725 hours

The actual output of 150 units

To calculate the variable overhead efficiency variance, we need to use the following formula:

variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate

Standard quantity= 150*7= 1,050 hours

variable overhead efficiency variance= (1,050 - 2,750)*13.4

variable overhead efficiency variance= $22,780 unfavorable

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