Question

Zitrik Corporation manufactured​ 130,000 buckets during February. The variable overhead​ cost-allocation base is​ $5.30 per​ machine-hour. The following variable overhead data pertain to​ February: Actual Budgeted Production ​130,000 units ​130,000 units ​Machine-hours ​9,500 hours ​9,000 hours Variable overhead cost per​ machine-hour ​$5.35 ​$5.30 What is the variable overhead efficiency​ variance?

Answer 1

Answer:

Efficiency variance  $2,650  unfavorable

Explanation:

Variable overhead efficiency variance: A variance is the difference between a standard cost and the actual cost. Variable overhead efficiency variance aims to determine whether or not their exist savings or extra cost incurred on variable overhead as a result of workers being faster or slower that expected.  

Since the variable overhead is charged using labour hours, any amount by which the actual labour hours differ from the standard allowable hours would result in a variance

                                                                                   Hours

130,000 units should have taken                            ​9,000

but did take   (actual hours)                                     9,500

Efficiency variance                                                     500 unfavorable

Standard variable overhead rate                             ​$5.30

Efficiency variance                                                     $2,650 unfavorable