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Jones Company allocates manufacturing overhead based on machine hours. Each chair produced should require 3 machine hours. Standard variable cost per machine hour is $5.00. During January, Jones Company actually used 1,100 machine hours to make 410 chairs. The company spent $5,720 in variable manufacturing overhead costs and $8,100 in fixed manufacturing overhead costs. What is the variable overhead efficiency variance?

Respuesta :

matthysswart

Answer:

$650

Explanation:

To calculate the variable overhead efficiency variance we start with the standard variable machine cost of $5. We then have to work out the amount of machine hours required for 410 chairs. This is 1230 (410 x 3). We actually only used 1100 hours to produce 410 chairs. We now use the formula, namely; standard variable rate x (actual hours-standard hours).

5 x (1100-1230)

= $650 favorable as we used less hours than the standard amount of hours for the chairs produced

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