A Corporation, which makes landing gears, has provided the following data for a

Question

A Corporation, which makes landing gears, has provided the following data for a recent month:
Budgeted production 1,200 gears
Standard machine-hours per gear 5.9 machine-hours
Budgeted supplies cost $6.50 per machine-hour
Actual production 1,300 gears
Actual machine-hours 7,950 machine-hours
Actual supplies cost (total)$49,742
________________________________________
Determine the rate and efficiency variances for the variable overhead item supplies and indicate whether those variables are favorable or unfavorable.

Explanation / Answer

Variable overhead rate variance = actual – (actual hours X standard variable rate)
Variable overhead rate variance = 49,742 – (7,950 x 6.50) = -1933 which is 1933 favorable
Variable overhead efficiency variance = Standard variable rate x (Actual hours – standard hours)
Variable overhead efficiency variance = 6.50 x (7,950 – 5.9*1300) = 1,820, which is 1,820 unfavorable

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.