Schley 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 3, 200 machine-hours.The company actually worked 3, 510 machine-hours during the month and the standard hours allowed for the actual output were 3, 660 machine-hours.What was the overall variable overhead efficiency variance for the month?

Question

Schley 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 3, 200 machine-hours.The company actually worked 3, 510 machine-hours during the month and the standard hours allowed for the actual output were 3, 660 machine-hours.What was the overall variable overhead efficiency variance for the month?

Quizplus · Accepted Answer

SR = $26, 240 ÷ 3, 200 hours = $8.20 per hour
Variable overhead efficiency variance = (AH - SH)× SR
= (3, 510 hours - 3, 660 hours)× $8.20 per hour
= (-150 hours)× $8.20 per hour
= $1, 230 F

Schley Corporation Applies Manufacturing Overhead to Products on the Basis