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30 November, 05:36

Pearle Corporation makes automotive engines. For the most recent month, budgeted production was 3,300 engines. The standard power cost is $9.20 per machine-hour. The company's standards indicate that each engine requires 2.1 machine-hours. Actual production was 3,400 engines. Actual machine-hours were 7,160 machine-hours. Actual power cost totaled $61,815.

Required:

a) Determine the rate and efficiency variances for the variable overhead item power cost and indicate whether those variances are unfavorable or favorable. (Input all amounts as positive values.)

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  1. 30 November, 06:18
    0
    Rate variance = $4057 Favorable

    Efficiency variance = $184 unfavorable

    Explanation:

    Rate variance $

    7,160 hours should have cost (7,160 * $9.20) 65872

    bur did cost (actual cost) 61,815

    Rate variance 4057 Favorable

    Efficiency variance

    3400 units should have taken (3,400 * 2.1 hours) 7140

    but did take 7,160

    Efiicienct=y varince (hours) 20 unfavorable

    standard hour * $9.20

    Efficiency variance $184 unfavorable

    Rate variance = $4057 Favorable

    Efficiency variance = $184 unfavorable
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