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
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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