Question

Sperazza Corporation produces large commercial doors for warehouses and other facilities. In the most recent month, the company budgeted production of 5,100 doors. Actual production was 5,500 doors. According to standards, each door requires 4.2 machine-hours. The actual machine-hours for the month were 23,540 machine-hours. The standard supplies cost is $1.10 per machine-hour. The actual supplies cost for the month was $24,011. Supplies cost is an element of variable manufacturing overhead. The variable overhead efficiency variance for supplies cost is:

$5,003 F

$5,003 U

$484 F

$484 U

Answer 1

Given,

SH (Standard hours) = Standard hours*Actual production

                                  = 4.2*5,500 doors

                                  = 23,100 Machine hours

Actual hours (AH) = 23,540 Machine hours

Standard rate (SR) = $1.10 per machine hour

Now,

Variable overhead efficiency variance = (SH – AH)*SR

                                                              = (23,100 – 23,540)*$1.10

                                                              = (– 440)*$1.10

                                                              = (–$484)

                                                              = $484 Unfavourable