Cady Machine Shop used 15,000 machine hours during January. It takes 0.90 machine-hours to produce one unit; 15,000 units were produced during the month. Budgeted production included 12,000 units, using 10,800 machine hours. Budgeted variable manufacturing overhead costs per machine-hour is $22.50. What is the variable overhead efficiency variance for Cady?
A) $67,500 unfavourable
B) $67,500 favourable
C) $37,000 favourable
D) $33,750 favourable
E) $33,750 unfavourable

Question

Quizplus · Accepted Answer

VOHEF = [15,000 MH - (15,000 × 0.90)] × ($22.50) = $33,750 unfavourable

Cady Machine Shop Used 15,000 Machine Hours During January