Answer:
variable overhead efficiency variance= $74,400 favorable
Explanation:
Giving the following information:
Actual variable overhead cost per unit of cost-allocation base $186
Actual quantity of variable overhead cost-allocation base used 5,000 machine-hours
Budgeted quantity of variable overhead cost-allocation base used 4,850 machine-hours
Budgeted production during the year 2,000 units
Actual production during the year 2,100 units
First, we need to determine the standard amount of hours that would have been used for 2,100 units.
Standard hours per unit= 5,000/2,000= 2.5 hours per unit
Standard hours for actual production= 2.5*2,100= 5,250
Now, we can calculate the overhead spending variance:
variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard Rate
variable overhead efficiency variance= (5,250 - 4,850)*186= $74,400 favorable
