Wadding Corporation applies manufacturing overhead to products on the basis of standard machine-hours. For the most recent month, the company based its budget on 3,600 machine-hours. Budgeted and actual overhead costs for the month appear below: The company actually worked 3,900 machine-hours during the month. The standard hours allowed for the actual output were 3,890 machine-hours for the month. What was the overall variable overhead efficiency variance for the month?
A) $760 Favorable
B) $104 Unfavorable
C) $180 Favorable
D) $656 Favorable

Question

Wadding Corporation applies manufacturing overhead to products on the basis of standard machine-hours. For the most recent month, the company based its budget on 3,600 machine-hours. Budgeted and actual overhead costs for the month appear below:  The company actually worked 3,900 machine-hours during the month. The standard hours allowed for the actual output were 3,890 machine-hours for the month. What was the overall variable overhead efficiency variance for the month?
A) $760 Favorable 
B) $104 Unfavorable 
C) $180 Favorable 
D) $656 Favorable

Quizplus · Accepted Answer

Variable overhead = $11,160 + $26,280 = $37,440
SR = $37,440 ÷ 3,600 hours = $10.40 per hour
Variable overhead efficiency variance = (AH - SH) × SR
= (3,900 hours - 3,890 hours) × $10.40 per hour
= (10 hours) × $10.40 per hour
= $104 U

Wadding Corporation Applies Manufacturing Overhead to Products on the Basis