Tycoon Manufacturing uses a standard costing system. The standard time to produce one unit is 4 hours, and normal production is 5,000 units monthly. Overhead costs were estimated to be $250,000. The standard variable overhead rate is $5 per machine hour. During October the following results were recorded:
$\begin{array} { l l }
\text { Units produced } & 4,900 \
\text { Units sold } & 4,600 \
\text { Machine hours required } & 20,500 \
\text { Actual overhead cost } & \$ 248,000
\end{array}$
The variable overhead efficiency variance was:
A) $4,500 U
B) $3,000 F
C) $0
D) $3,000 U

Question

Tycoon Manufacturing uses a standard costing system. The standard time to produce one unit is 4 hours, and normal production is 5,000 units monthly. Overhead costs were estimated to be $250,000. The standard variable overhead rate is $5 per machine hour. During October the following results were recorded:
 $\begin{array} { l l } 
\text { Units produced } & 4,900 \
\text { Units sold } & 4,600 \
\text { Machine hours required } & 20,500 \
\text { Actual overhead cost } & \$ 248,000
\end{array}$ 
The variable overhead efficiency variance was:
A) $4,500 U
B) $3,000 F
C) $0
D) $3,000 U

Quizplus · Accepted Answer

The variable overhead efficiency variance is calculated as the difference between the actual overhead cost and the standard overhead cost, which is based on the standard variable overhead rate and the actual machine hours required. In this case, the standard variable overhead cost is $5 per machine hour, and the actual machine hours required are 20,500. Therefore, the standard overhead cost is $5 x 20,500 = $102,500. The actual overhead cost is $248,000. Therefore, the variable overhead efficiency variance is $248,000 - $102,500 = $4,500 U.

Tycoon Manufacturing Uses a Standard Costing System The Variable Overhead Efficiency Variance Was: A) $4,500 U B)

Tycoon Manufacturing Uses a Standard Costing System The Variable Overhead Efficiency Variance Was:
A) $4,500 U
B)