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 5
Standard variable overhead rate per DL hour $ 6.00
Standard variable overhead cost per unit $ 30.00
Actual variable overhead costs $ 16,400
Actual DL hours 2,050
Actual variable overhead cost per machine hour $ 8.00
Actual tubs produced 1,500
1. What is the variable manufacturing overhead efficiency variance in​ March?

Answer 1

$32,700 Favorable

Step-by-step explanation:

Variable Manufacturing overhead efficiency variance can be computed as follows,

VMOH Variance = Standard Overhead rate * (Actual Hours - Standard Hours)

VMOH Variance = 6.0 * (2050 - (1500 * 5))

Variance = $32,700 Favorable

This a favorable variance as budgeted per tub direct labor hours are more than they actually were at production level of 1500 tubs.

Hope that helps.