Mongar Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual overhead costs for the most recent month appear below: The original budget was based on 4,200 machine-hours. The company actually worked 4,350 machine-hours during the month and the standard hours allowed for the actual output were 4,190 machine-hours. What was the overall variable overhead efficiency variance for the month?

Question

Mongar Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual overhead costs for the most recent month appear below:  The original budget was based on 4,200 machine-hours. The company actually worked 4,350 machine-hours during the month and the standard hours allowed for the actual output were 4,190 machine-hours. What was the overall variable overhead efficiency variance for the month?

Quizplus · Accepted Answer

SR = $37,800 ÷ 4,200 hours = $9.00 per hour
Variable overhead efficiency variance = (AH - SH) × SR
= (4,350 hours - 4,190 hours) × $9.00 per hour
= (160 hours) × $9.00 per hour
= $1,440 U

Mongar Corporation Applies Manufacturing Overhead to Products on the Basis