Riverside Manufacturing designs and manufactures bathtubs for home and commercial applications. Riverside recorded the following data for its commercial bathtub production line during the month of March: Standard DL hours per tub 4 Standard variable overhead rate per DL hour $ 8.00 Standard variable overhead cost per unit $ 32.00 Actual variable overhead costs $ 18,450 Actual DL hours 2,050 Actual variable overhead cost per machine hour $ 9.00 Actual tubs produced 800 What is the variable manufacturing overhead efficiency variance in March?

variable overhead efficiency variance = $9,200 favorable

Explanation:

Giving the following information:

Riverside recorded the following data for its commercial bathtub production line during March:

Standard DL hours per tub = 4

Standard variable overhead rate per DL hour = $ 8.00

Standard variable overhead cost per unit = $ 32.00

Actual variable overhead costs = $ 18,450

Actual DL hours = 2,050

Actual variable overhead cost per machine hour = $ 9.00

Actual tubs produced = 800

We need to use the following formula:

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

SQ = 800 tubs * 4 hours = 3,200 hours

AQ = 2,050 hours

SR = $8 per direct labor hour

variable overhead efficiency variance = (3,200 - 2,050) * 8 = $9,200 favorable