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 6.8 hours Standard variable overhead rate $ 13.20 per hour The following data pertain to operations for the last month: Actual hours 2,700 hours Actual total variable manufacturing overhead cost $ 36,310 Actual output 200 units What is the variable overhead efficiency variance for the month?

Answer 1

$17,688 unfavorable

Step-by-step explanation:

The computation of the variable efficiency variance is shown below:

Variable efficiency variance = (Actual hours - standard hours) × standard rate

= (2,700 hours - 200 units × 6.8 hours) × $13.20

= (2,700 hours - 1,360 hours) × $13.20

= 1,340 hours × $13.20

= $17,688 unfavorable

Since the actual hours is more than the standard hours so it would leads to unfavorable variance