Wadding Corporation applies manufacturing overhead to products on the basis of s

Question

Wadding Corporation applies manufacturing overhead to products on the basis of standard machine-hours. For the most recent month, the company based its budget on 4,200 machine-hours. Budgeted and actual overhead costs for the month appear below:

The company actually worked 4,400 machine-hours during the month. The standard hours allowed for the actual output were 4,390 machine-hours for the month. What was the overall variable overhead efficiency variance for the month?

Original Budget Based on 4,200 Machine-Hours- Actual Costs Variable overhead costs: Supplies $ 11,950 $ 12,430 Indirect labor 34,250 35,400 Fixed overhead costs: Supervision 20,300 19,940 Utilities 6,500 6,430 Factory depreciation 7,500 7,810 Total overhead cost $ 80,500 $ 82,010

Explanation / Answer

Standard variable overhead rate = (11950+34250)/4200=11 Variable overhead efficiency variance = 11*(4400-4390)= 110 Unfavorable

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