Chapeter 10 Quiz. question 2) Bondi Corporation makes automotive engines. For th

Question

Chapeter 10 Quiz. question 2) Bondi Corporation makes automotive engines. For the most recent month, budgeted production was 2,800 engines. The standard power cost is $1.90 per machine-hour. The company's standards indicate that each engine requires 10.6 machine-hours. Actual production was 3,100 engines. Actual machine-hours were 31,380 machine-hours. Actual power cost totaled $62,280.

Required:

Determine the rate and efficiency variances for the variable overhead item power cost and indicate whether those variances are unfavorable or favorable.

(Input all amounts as positive values.)

Variable overhead rate variance Variable overhead efficiency variance

Explanation / Answer

Variable overhead rate variance = (Standard rate-actual rate)actual hours

= (1.90*31380-62280)

Variable overhead rate variance = 2658 Unfavourable

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

= (3100*10.6-31380)1.90

Variable overhead efficiency variance = 2812 Favourable

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