Use the information below to answer the following question(s).Moeller Electric manufactures light fixtures.The following information pertains to the company's manufacturing overhead data.
-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

Use the information below to answer the following question(s).Moeller Electric manufactures light fixtures.The following information pertains to the company's manufacturing overhead data. 
-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

Quizplus · Accepted Answer

Variable overhead efficiency variance = (actual machine hours - standard machine hours allowed) x standard variable overhead rate per hour

Standard machine hours allowed = 0.90 machine-hours per unit x 15,000 units = 13,500 machine-hours
Standard variable overhead rate per hour = $22.50

Variable overhead efficiency variance = (15,000 - 13,500) x $22.50 = $33,750 unfavourable.

Therefore, the correct answer is E) $33,750 unfavourable.

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