Ruston 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 4,500 machine-hours.The company actually worked 4,590 machine-hours during the month and the standard hours allowed for the actual output were 4,700 machine-hours.What was the overall variable overhead efficiency variance for the month?
A)$50 unfavorable
B)$869 favorable
C)$969 unfavorable
D)$100 unfavorable

Question

Ruston 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 4,500 machine-hours.The company actually worked 4,590 machine-hours during the month and the standard hours allowed for the actual output were 4,700 machine-hours.What was the overall variable overhead efficiency variance for the month?
A)$50 unfavorable 
B)$869 favorable 
C)$969 unfavorable 
D)$100 unfavorable

Quizplus · Accepted Answer

SR = $35,550 F1F1F1S1F1F1F10 4,500 hours = $7.90 per hour
Variable overhead efficiency variance = (AH - SH)SR
= (4,590 hours - 4,700 hours)$7.90 per hour
= (-110 hours)$7.90 per hour = $869 F

Ruston Corporation Applies Manufacturing Overhead to Products on the Basis