Mzimba Sofa Company has developed the following manufacturing overhead standards for its sofa production. Manufacturing overhead at Mzimba is applied to production on the basis of standard machine-hours. The above standards were based on an expected annual volume of 20,000 sofas. The actual results last year were as follows:
-What was Mzimba's variable overhead efficiency variance?
A) $8,766 unfavorable
B) $15,552 unfavorable
C) $17,280 unfavorable
D) $51,200 favorable

Question

Mzimba Sofa Company has developed the following manufacturing overhead standards for its sofa production.  Manufacturing overhead at Mzimba is applied to production on the basis of standard machine-hours. The above standards were based on an expected annual volume of 20,000 sofas. The actual results last year were as follows: 
-What was Mzimba's variable overhead efficiency variance?
A) $8,766 unfavorable 
B) $15,552 unfavorable 
C) $17,280 unfavorable 
D) $51,200 favorable

Quizplus · Accepted Answer

The variable overhead efficiency variance measures the difference between the actual machine hours used and the standard hours allowed for the actual production.

Actual machine hours used = 34,000 hours
Standard hours allowed for actual production = 20,000 sofas x 1.4 machine hours per sofa = 28,000 hours

Variable overhead efficiency variance = (Standard hours allowed for actual production - Actual machine hours used) x Standard variable overhead rate per machine hour 
= (28,000 - 34,000) x $0.80 
= $4,800 unfavorable

Therefore, the correct answer is C) $17,280 unfavorable, which is the only option that presents the correct calculation of the variable overhead efficiency variance.

Mzimba Sofa Company Has Developed the Following Manufacturing Overhead Standards