Tavorn Corporation applies manufacturing overhead to products on the basis of st

Question

Tavorn Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The company's standard variable manufacturing overhead rate is $1.80 per machine-hour. The actual variable manufacturing overhead cost for the month was $13,080. The original budget for the month was based on 7,100 machine-hours. The company actually worked 7,210 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 7,070 machine-hours. What was the variable overhead efficiency variance for the month? A) $354 unfavorable B) $252 unfavorable C) $54 favorable D) $102 unfavorable

Explanation / Answer

Variable overhead efficiency variance = SVR(AH-SH) = 1.80*(7210 – 7070) = 252, which is unfavorable because it is positive (actual being greater than standard is unfavorable). Answer: B, $252 unfavorable SVR is standard variable rate AH is actual hours SH is standard hours

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