Wineman Incorporated makes a single product-an electrical motor used in many long-haul trucks. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below: The variable overhead efficiency variance is:
A) $2,907 U
B) $2,250 U
C) $2,907 F
D) $2,250 F

Question

Wineman Incorporated makes a single product-an electrical motor used in many long-haul trucks. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below:  The variable overhead efficiency variance is:
A) $2,907 U 
B) $2,250 U 
C) $2,907 F 
D) $2,250 F

Quizplus · Accepted Answer

Variable component of the predetermined overhead rate (SR) = $153,425/47,500 machine-hours
= $3.23 per machine-hour
Variable overhead efficiency variance = (AH − SH) × SR
= (42,800 machine-hours − 43,700 machine-hours) × $3.23 per machine-hour
= (−900 machine-hours) × $3.23 per machine-hour
= $2,907 F

Wineman Incorporated Makes a Single Product-An Electrical Motor Used in Many