A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on machine-hours. The following data pertain to operations for the last month:
-What is the variable overhead efficiency variance for the month?
A)$7,105 U
B)$6,989 F
C)$6,989 U
D)$1,104 U

Question

A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on machine-hours.  The following data pertain to operations for the last month: 
-What is the variable overhead efficiency variance for the month?
A)$7,105 U 
B)$6,989 F 
C)$6,989 U 
D)$1,104 U

Quizplus · Accepted Answer

SH = 1,200 units F1F1F1S1F1F1F10 4.6 hours per unit = 5,520 hours
Variable overhead efficiency variance = (AH - SH)SR
= (6,100 hours - 5,520 hours)$12.25 per hour
= (580 hours)$12.25 per hour = $7,105 U

A Manufacturing Company That Has Only One Product Has Established