Capital Manufacturing designs and manufactures bathtubs for home and commercial

Question

Capital Manufacturing designs and manufactures bathtubs for home and commercial applications. Capital recorded the following data for its commercial bathtub production line during the month of March Standard DL hours per tub Standard overhead rate per DL hour Standard overhead cost per unit S6.50 $19.50 Actual overhead costs Actual DL hours Actual overhead cost per machine hour $22,750 3,250 $7.00 Actual tubs produced 1,100 What is the variable manufacturing overhead efficiency variance in March? 0 A. $1,625 favorable O B. $325 favorable O C. $325 unfavorable O D. $1,625 unfavorable

Explanation / Answer

Variable overhead efficiency variance = (Standard hour-actual hour)Standard rate

                                                             = (1100*3-3250)*6.50

Variable overhead efficiency variance = 325 Favorable

so answer is b) $325 Favorable

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