Pyrdum Corporation produces metal telephone poles. In the most recent month, the company budgeted production of 3,500 poles. Actual production was 3,800 poles. According to standards, each pole requires 4.6 machine-hours. The actual machine-hours for the month were 17,800 machine-hours. The standard variable manufacturing overhead rate is $5.40 per machine-hour. The actual variable manufacturing overhead cost for the month was $96,712. The variable overhead efficiency variance is:

Question

Quizplus · Accepted Answer

The variable overhead efficiency variance formula is: 
(Standard machine-hours - Actual machine-hours) x Standard variable overhead rate 
= (3,500 x 4.6 - 17,800) x $5.40 
= (16,100 - 17,800) x $5.40 
= -1,700 x $5.40 
= $9,180 Unfavorable

Therefore, the answer is D) $1,728 Unfavorable, since the question asked for the variance amount, not the total cost.

Pyrdum Corporation Produces Metal Telephone Poles