Keenes Systems allocates manufacturing overhead based on machine hours. Each con

Question

Keenes Systems allocates manufacturing overhead based on machine hours. Each connector should require 8 machine hours. According to the static? budget, Keenes expected to incur the? following:

480 machine hours per month (60 connectors x 8 machine hours per? connector)

$6,000 in variable manufacturing overhead costs $9,450 in fixed manufacturing overhead costs

During? August,

Keenes actually used 500 machine hours to make 86connectors and spent $5,300 in variable manufacturing costs and $9,100 in fixed manufacturing overhead costs. Calculate the variable overhead efficiency variance for Keenes.

A. $950 U

B. $1,400 FF

C. $2,350 FF

D. $3,300 F

Explanation / Answer

Variable overhead efficiency variance:

= Standard overhead rate×(Actual hours-Standard hours)

= ($6,000/480)×(500-86×8)

= $12.50×(500-688)

= $12.50×188

= $2,350 F

Hence, correct option is (C) $2,350 F

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