Question

Riverside Manufacturing designs and manufactures bathtubs for home and commercial applications. Riverside recorded the following data for its commercial bathtub production line during the month of​ March: Standard DL hours per tub 4 Standard variable overhead rate per DL hour $ 8.00 Standard variable overhead cost per unit $ 32.00 Actual variable overhead costs $ 18,450 Actual DL hours 2,050 Actual variable overhead cost per machine hour $ 9.00 Actual tubs produced 800 What is the variable manufacturing overhead efficiency variance in​ March?

Answer 1

variable overhead efficiency variance= $9,200 favorable

Step-by-step explanation:

Giving the following information:

Riverside recorded the following data for its commercial bathtub production line during ​ March:

Standard DL hours per tub= 4

Standard variable overhead rate per DL hour= $ 8.00

Standard variable overhead cost per unit= $ 32.00

Actual variable overhead costs= $ 18,450

Actual DL hours= 2,050

Actual variable overhead cost per machine hour= $ 9.00

Actual tubs produced= 800

We need to use the following formula:

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

SQ= 800 tubs* 4 hours= 3,200 hours

AQ= 2,050 hours

SR= $8 per direct labor hour

variable overhead efficiency variance= (3,200 - 2,050)*8= $9,200 favorable