Question

John Williams, manager of Phoenix Entertainment, wants to compute the variable overhead efficiency variance for the year. He has the following details: Variable overhead flexible budget variance (unfavorable) $23,625 Budgeted input quantity allowed for actual output 9,000 units Actual input quantity used of cost-allocation base used 10,125 units Budgeted variable overhead cost per unit of cost- allocation base $30 Actual variable overhead cost per unit of cost- allocation base $29 What will be the variable overhead efficiency variance for the year

Answer 1

2nd option is correct.

Step-by-step explanation:

Variable over head = (Actual Qty. - Standard Qty. ) * Standard cost

Efficiency variance

= (10125-9000) * 30

= $ 33750 (Un-Favorable)

2nd option is correct.

Variance is unfavorable because actual quantity used to produce is more than budgeted quantity allowed at that level of production.