question archive A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead
A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead
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A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. Variable manufacturing overhead standards are based on machine-hours. Standard hours per unit of output 3.90 machine-hours Standard variable overhead rate $11.25 per machine-hour The following data pertain to operations for the last month: Actual hours 8,800 machine-hours Actual total variable manufacturing overhead cost $95,850 Actual output 2,200 units What is the variable overhead efficiency variance for the month? $2,692 U $7,513 F $2,475 U $7,513 U
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Answer:
Standard rate per hr=$11.25
Actual hrs=8,800 hrs
Standard hrs = Standard hr require per unit x Actual Production
=3.90 x 2,200
= 8,580hrs
Variable over head Efficiency Variance= (Actual Hrs- Standard Hrs) x Standard rate per hr
=(8,800 -8,580) x $11.25
=220 x $11.25
=$2,475 U
Hence 3rd Option Correct
