Question

Austin Company allocates manufacturing overhead based on machine hours. Each chair produced should require 4 machine hours. Standard variable cost per machine hour is $5.40. During January, Austin Company actually used 2,100 machine hours to make 510 chairs. The company spent $11,130 in variable manufacturing overhead costs and $9,100 in fixed manufacturing overhead costs. What is the variable overhead efficiency variance?

Answer 1

$114 unfavorable variance

Step-by-step explanation:

Austin produced 510 chairs:

estimated machine hours actual machine hours

2,040 hours 2,100

estimated variable overhead actual variable overhead

$11,016 $11,130

the variable overhead efficiency variance is $11,016 - $11,130 = -$114

a negative number means that the variable variance is $114 unfavorable