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16 July, 15:27

Pleiss Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The compa variable manufacturing overhead rate is $2.40 per machine-hour. The actual variable manufacturing overhead cost for the month was $5,240. The original budget for the month was based on 2,100 machine-hours. The co hours during the month. The standard hours allowed for the actual output of the month totaled 2.280 machine-hours. What was the variable overhead efficiency variance for the month?

a. $232 Favorable

b. $208 Favorable

c. $24 Favorable

d. $432 Unfavorable

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  1. 16 July, 19:04
    0
    Variable Overhead Efficiency Variance = $24 Favorable

    so correct option is c. $24 Favorable

    Explanation:

    given data

    variable manufacturing overhead rate = $2.40 per machine hour

    actual variable manufacturing overhead cost = $5,240

    original budget = 2,100 machine hours

    actual output = 2.280 machine hours

    to find out

    variable overhead efficiency variance

    solution

    we know Standard Cost Per Hour that is

    Standard Time = 2100 hours

    Standard Rate = $2.40 per hour

    Standard Cost per unit = 2100 * $2.40 = $5040

    and

    Standard Cost for actual output will be

    Standard Time = 2280 hours

    Standard Rate = $2.40 per hour

    Standard Cost per unit = 2280 * $2.40 = $5472

    so actual overhead expenses will be

    Actual Time = 2270 hours

    Actual Rate = $2.31 per hour

    Actual Cost = $5240

    so

    Variable Overhead Efficiency Variance will be

    Variable Overhead Efficiency Variance = (Standard Hours - Actual Hours) * Standard Variable Overhead Rate ... 1

    Variable Overhead Efficiency Variance = (2280 - 2270) * $2.40

    Variable Overhead Efficiency Variance = $24 Favorable

    so correct option is c. $24 Favorable
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