Question

Pyrdum Corporation produces metal telephone poles. In the most recent month, the company budgeted production of 3,500 poles. Actual production was 3,800 poles. According to standards, each pole requires 4.6 machine-hours. The actual machine-hours for the month were 17,800 machine-hours. The standard variable manufacturing overhead rate is $5.40 per machine-hour. The actual variable manufacturing overhead cost for the month was $96,712. The variable overhead efficiency variance is:

Answer 1

Answer:

$1,728 U

Explanation:

Budgeted Production = 3500 poles

Actual production = 3800 poles

Standard machine hour/pole= 4.60

Total standard hours for actual production = 3800*4.60 = 17,480 machine hours

Actual machine hours for the month = 17,800 machine hours

Standard variable manufacturing overhead rate = $5.40 per machine hour

The actual variable manufacturing overhead cost = $96,712

Variable overheard Efficiency variance = (Standard overhead rate* (Actual hours - Standard hours)

= $5.40* (17,800- 17,480)

= $5.40 *320

= $1,728 U

The actual hours is more than standard hours. thus, it is an unfavorable variance.