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?
A)$130 Unfavorable
B)$950 Favorable
C)$1,310 Favorable
D)$1,440 Unfavorable

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?
A)$130 Unfavorable 
B)$950 Favorable 
C)$1,310 Favorable 
D)$1,440 Unfavorable

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
Reference: CH09-Ref1
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Mongar Corporation Applies Manufacturing Overhead to Products on the Basis