Admac Technologies has a standard variable overhead rate of $4.50 per machine hour, and each unit produced has a standard time allowed of three hours.The company's static budget was based on 46,000 units.Actual results for the year follow. Actual units produced: 42,000 Actual machine hours worked: 120,000 Actual variable overhead incurred: $520,000 Admac's variable-overhead eﬃciency variance is:
A)$20,000 favorable.
B)$20,000 unfavorable.
C)$27,000 favorable.
D)$27,000 unfavorable.
E)None of the answers is correct.

Question

Quizplus · Accepted Answer

Variable overhead efficiency variance = (Standard machine hours - Actual machine hours)* Standard variable overhead rate per machine hour

= (46,000 units * 3 hrs/unit - 120,000 hrs) * $4.50/hr

= 27,000 favorable

Therefore, the answer is (C) $27,000 favorable.

Admac Technologies Has a Standard Variable Overhead Rate of $4