Merle Corporation applies manufacturing overhead to products on the basis of standard machine-hours.For the most recent month, the company based its budget on 4, 000 machine-hours.Budgeted and actual overhead costs for the month appear below: The company actually worked 3, 690 machine-hours during the month.The standard hours allowed for the actual output were 3, 620 machine-hours for the month.What was the overall variable overhead efficiency variance for the month?

Question

Merle Corporation applies manufacturing overhead to products on the basis of standard machine-hours.For the most recent month, the company based its budget on 4, 000 machine-hours.Budgeted and actual overhead costs for the month appear below:  The company actually worked 3, 690 machine-hours during the month.The standard hours allowed for the actual output were 3, 620 machine-hours for the month.What was the overall variable overhead efficiency variance for the month?

Quizplus · Accepted Answer

Variable overhead = $14, 000 + $27, 200 = $41, 200
SR = $41, 200 ÷ 4, 000 hours = $10.30 per hour
Variable overhead efficiency variance = (AH - SH)× SR
= (3, 690 hours - 3, 620 hours)× $10.30 per hour
= (70 hours)× $10.30 per hour
= $721 U

Merle Corporation Applies Manufacturing Overhead to Products on the Basis