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10 September, 03:39

The following standards for variable manufacturing overhead have been established for a company that makes only one product:

Standard hours per unit of output 7.0 hours

Standard variable overhead rate $ 13.40 per hour

The following data pertain to operations for the last month:

Actual hours 2,725 hours

Actual total variable manufacturing overhead cost $ 37,195

Actual output 150 units

What is the variable overhead efficiency variance for the month?

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  1. 10 September, 03:49
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    variable overhead efficiency variance = $22,780 unfavorable

    Explanation:

    Giving the following information:

    Standard hours per unit of output 7.0 hours

    Standard variable overhead rate $ 13.40 per hour

    Actual hours 2,725 hours

    The actual output of 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*7 = 1,050 hours

    variable overhead efficiency variance = (1,050 - 2,750) * 13.4

    variable overhead efficiency variance = $22,780 unfavorable
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