Ask Question
1 January, 14:25

Andover Systems has a standard variable overhead rate of $5.60 per machine hour, and each unit produced has a standard time allowed of 2.50 hours. The company's static budget was based on 46,000 units. Actual results for the year follow.

Actual units produced: 47,000

Actual machine hours worked: 110,000

Actual variable overhead incurred: $590,000

Andover's variable-overhead efficiency variance is:

+4
Answers (2)
  1. 1 January, 14:49
    0
    Andover's variable-overhead efficiency variance is $-42,000 Unfavourable

    Explanation:

    According to the given data we have the following:

    Standard overhead rate=$ 5.60 per hour

    Actual Hours=110,000 hours

    Standard hours=47,000 units x 2.5 hours per unit

    =117,500 hours

    Therefore, in order to calculate the Andover's variable-overhead efficiency variance we would have to use the following formula:

    Variable Overhead efficiency variance=Standard overhead rate x (Actual hours - standard hours)

    =$ 5.60 x (110,000 - 117,500)

    =$-42,000 Unfavourable
  2. 1 January, 14:53
    0
    42,000 Favorable

    Explanation:

    Actual units produced: 47,000 * Standard time allowed of 2.50 hours=117,500

    117,500-Actual machine hours worked: 110,000 = 7,500

    Hence;

    7,500*$5.60

    =42,000 Favorable

    Therefore Andover's variable-overhead efficiency variance is: 42,000 which is Favorable
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Andover Systems has a standard variable overhead rate of $5.60 per machine hour, and each unit produced has a standard time allowed of 2.50 ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers