The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 8.8 hours Standard variable overhead rate $ 15.20 per hour The following data pertain to operations for the last month: Actual hours 2,950 hours Actual total variable manufacturing overhead cost $ 45,610 Actual output 150 units What is the variable overhead efficiency variance for the month

Question

Business

Liliana Mann

4 December, 15:46

The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 8.8 hours Standard variable overhead rate $ 15.20 per hour The following data pertain to operations for the last month: Actual hours 2,950 hours Actual total variable manufacturing overhead cost $ 45,610 Actual output 150 units What is the variable overhead efficiency variance for the month

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Olivia Espinoza · Answer 1

variable overhead efficiency variance = $24,776 unfavorable

Explanation:

Giving the following information:

Standard hours per unit of output 8.8 hours

Standard variable overhead rate $ 15.20 per hour

Actual hours 2,950 hours

Actual output 150 units

To calculate the variable overhead efficiency variance, we need to use the following formula:

variable overhead efficiency variance = (Standard Quantity - Actual Quantity) * Standard rate

Standard quantity = 150*8.8 = 1,320 hours

variable overhead efficiency variance = (1,320 - 2,950) * 15.2

variable overhead efficiency variance = $24,776 unfavorable