Question

Donkey-Kong Corporation manufactured 30,000 ice chests during August. The overhead cost-allocation base was $12 per machine-hour. The following variable overhead data pertain to September:

Budgeted Actual
Production 30,000 units 24,000 units
Machine-hours 15,000 hours 10,800 hours
Variable overhead cost per machine-hour: $12.00 $11.25

What is the variable overhead efficiency variance?

a. 51890 favorable
b. $34,830 unfavorable
c. $36.720 unfavorable
e. 512.240 unfavorable

Answer 1

Variable overhead efficiency variance= $14,400 favorable

Step-by-step explanation:

Giving the following information:

Budgeted Actual

Production 30,000 units 24,000 units

Machine-hours 15,000 hours 10,800 hours

Variable overhead cost per machine-hour: $12.00 $11.25

To calculate the variable overhead efficiency variance, we need to use the following formula:

Variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate

Variable overhead efficiency variance= (12,000 - 10,800)*12

Variable overhead efficiency variance= $14,400 favorable