Question

The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 8.8 hours Standard variable overhead rate $ 15.20 per hour The following data pertain to operations for the last month: Actual hours 2,950 hours Actual total variable manufacturing overhead cost $ 45,610 Actual output 150 units What is the variable overhead efficiency variance for the month

Answer 1

variable overhead efficiency variance= $24,776 unfavorable

Step-by-step explanation:

Giving the following information:

Standard hours per unit of output 8.8 hours

Standard variable overhead rate $ 15.20 per hour

Actual hours 2,950 hours

Actual output 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*8.8= 1,320 hours

variable overhead efficiency variance= (1,320 - 2,950)*15.2

variable overhead efficiency variance= $24,776 unfavorable