Question

Figures Incorporated makes a single product—an electrical motor used in many long-haul trucks. The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Budgeted variable manufacturing overhead $ 66,570 Budgeted hours 21,000 labor-hours Standard hours allowed for the actual production 18,000 labor-hours Actual variable manufacturing overhead $ 56,736 Actual hours 19,700 labor-hours The variable overhead efficiency variance is:

Answer 1

Answer:

variable overhead efficiency variance=  $5,389 unfavorable

Explanation:

Giving the following information:

Budgeted variable manufacturing overhead $ 66,570

Budgeted hours 21,000 labor-hours

Standard hours allowed for the actual production 18,000 labor-hours

Actual hours 19,700 labor-hours

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 rate= 66,570/21,000= $3.17 per hour

variable overhead efficiency variance=  (18,000 - 19,700)*3.17

variable overhead efficiency variance=  $5,389 unfavorable