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 tub5Standard variable overhead rate per DL hour​$6.00Standard variable overhead cost per unit​$30.00Actual variable overhead costs​$21,375Actual DL hours​2,850Actual variable overhead cost per machine hour​$7.50Actual tubs produced​1,500What is the variable manufacturing overhead efficiency variance in​ March?

Answer 1

variable overhead efficiency variance= $27,900 favorable

Step-by-step explanation:

Giving the following information:

Standard DL hours per tub= 5 hours

Standard variable overhead rate per DL hour= ​$6.00

Actual DL hours​= 2,850

Actual tubs produced= ​1,500

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= 1,500units*5= 7,500

variable overhead efficiency variance= (7,500 - 2,850)*6

variable overhead efficiency variance= $27,900 favorable