Question

Sperazza Corporation produces large commercial doors for warehouses and other facilities. In the most recent month, the company budgeted production of 6,200 doors. Actual production was 6,600 doors. According to standards, each door requires 6.4 machine-hours. The actual machine-hours for the month were 43,490 machine-hours. The standard supplies cost is $2.20 per machine-hour. The actual supplies cost for the month was $87,415. Supplies cost is an element of variable manufacturing overhead. The variable overhead efficiency variance for supplies cost is:

Answer 1

Variable overhead efficiency variance= $2,310 unfavorable

Step-by-step explanation:

Giving the following information:

Actual production was 6,600 doors.

According to standards, each door requires 6.4 machine-hours.

The actual machine-hours for the month were 43,490 machine-hours.

The standard supplies cost is $2.20 per machine-hour.

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= 6.4*6,600= 42,440

Variable overhead efficiency variance= (42,440 - 43,490)*2.2

Variable overhead efficiency variance= $2,310 unfavorable