Welcome Corporation produces metal telephone poles. In the most recent month, the company budgeted production of 4,100 poles. Actual production was 4,400 poles. According to standards, each pole requires 7.0 machine-hours. The actual machine-hours for the month were 31,140 machine-hours. The standard variable manufacturing overhead rate is $2.50 per machine-hour. The actual variable manufacturing overhead cost for the month was $83,787. The variable overhead efficiency variance is:

Question

Quizplus · Accepted Answer

The variable overhead efficiency variance is calculated as (Actual machine-hours - Standard machine-hours) x Standard rate. Standard machine-hours = 4,400 poles x 7.0 hours = 30,800 hours. Variance = (31,140 - 30,800) x $2.50 = $850 U.

Welcome Corporation Produces Metal Telephone Poles