Question

If 200,000 machine‐hours are budgeted for variable overhead at a standard rate of $5/machine‐hour, but 220,000 machine‐hours were actually used at an actual rate of $6/machine‐hour, what is the variable overhead efficiency variance?

Answer 1

Answer:

Variable overhead efficiency variance= $100,000 unfavorable

Explanation:

Giving the following information:

200,000 machine‐hours are budgeted for variable overhead at a standard rate of $5/machine‐hour, but 220,000 machine‐hours were used.

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

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

Variable overhead efficiency variance= (200,000 - 220,000)*5

Variable overhead efficiency variance= $100,000 unfavorable