Tantanka Manufacturing Corporation uses a standard cost system with machine-hours as the activity base for overhead. The following information relates to production for last year: The standard machine-hours allowed for actual output during the year were 7,600. The actual machine-hours incurred were 7,500.
What was Tantanka's variable overhead efficiency variance?
A) $5,400 Favorable
B) $5,472 Unfavorable
C) $21,600 Unfavorable
D) $51,000 Unfavorable

Question

Tantanka Manufacturing Corporation uses a standard cost system with machine-hours as the activity base for overhead. The following information relates to production for last year:  The standard machine-hours allowed for actual output during the year were 7,600. The actual machine-hours incurred were 7,500.
What was Tantanka's variable overhead efficiency variance?
A) $5,400 Favorable 
B) $5,472 Unfavorable 
C) $21,600 Unfavorable 
D) $51,000 Unfavorable

Quizplus · Accepted Answer

SR = $410,400 ÷ 7,600 hours = $54 per hour
Variable overhead efficiency variance = (AH − SH) × SR
= (7,500 hours − 7,600 hours) × $54 per hour
= (−100 hours) × $54 per hour
= $5,400 F

Tantanka Manufacturing Corporation Uses a Standard Cost System with Machine-Hours