Question

Bondi Corporation makes automotive engines. For the most recent month, budgeted production was 3,100 engines. The standard power cost is $2.20 per machine-hour. The company's standards indicate that each engine requires 10.9 machine-hours. Actual production was 3,400 engines. Actual machine-hours were 35,130 machine-hours. Actual power cost totaled $81,975.

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 _______ _____ ( F , U ) (lol not litterally)

variable overhead efficiency varience ______ _____ ( F, U )

Answer 1

Answer:

Variable overhead rate variance 4689( U )

variable overhead efficiency variance 4246 ( F)

Working notes for the above answer is as under

Variable overhead rate variance

= (AH ´ AR) - (AH ´ SR)
= $81975 - (35130 hours ´ $2.20 per hour)
= $81975 - $77286

=4689 U

___________________________________

SH = 10.9 hours per unit ´ 3,400 units = 37,060 hours
Variable overhead efficiency variance

= (AH - SH)x SR
= (35130 hours - 37060 hours) $2.20 per hour
= (-1930 hours) $2.20 per hour

= $4246 F