Geschke Corporation, which produces commercial safes, has provided the following data: Supplies cost is an element of variable manufacturing overhead.The variable overhead efficiency variance for supplies is closest to:

Question

Geschke Corporation, which produces commercial safes, has provided the following data:  Supplies cost is an element of variable manufacturing overhead.The variable overhead efficiency variance for supplies is closest to:

Quizplus · Accepted Answer

The variable overhead efficiency variance for supplies is calculated as the difference between the actual quantity of supplies used and the standard quantity of supplies that should have been used, multiplied by the standard price per unit. Since the question does not provide any actual quantity or price per unit, we cannot calculate the variance directly. However, we can use some logical reasoning based on the answer choices.

If the variance is favorable, it means that the actual quantity of supplies used was less than the standard quantity, or that the actual price per unit was lower than the standard price. Therefore, the cost of supplies would be lower than expected, which is good for the company.

If the variance is unfavorable, it means that the actual quantity of supplies used was higher than the standard quantity, or that the actual price per unit was higher than the standard price. Therefore, the cost of supplies would be higher than expected, which is bad for the company.

Based on this reasoning, we can eliminate choices A and C, since they both suggest a large unfavorable variance, which would not be good for the company.

Now we are left with choices B and D. If the variance is only $119, it means that it is relatively small compared to the total cost of supplies. Therefore, we can assume that it is more likely to be favorable than unfavorable, since a small difference in quantity or price would not have a significant impact on the cost.

Therefore, the best choice is D, with a favorable variance of $119.

Geschke Corporation, Which Produces Commercial Safes, Has Provided the Following