Sifford Corporation, Which males landing gears, has provided the following data

Question

Sifford Corporation, Which males landing gears, has provided the following data for a recent month: Budgeted production:8,400 Gears, Standard machine-hours per gear: 9.4 machine-hours, Budgeted supplies cost: $2.40 per machine-hour, Actual production: 8,500 gears, Actual machine-hours: 79,030 machine-hours, Actual supplies cost (total):$210,524.

Required: Determine the rate and efficiency variances for the variable overhead item supplies and indicate wheather those variables are favorable or unfavorable. Show your work!

Explanation / Answer

Efficiency Variance =(Standard Hour - Actual Hour) x Standard Rate = (8500 x 9.4 - 79030) x 2.40 = $2088 Favorable Rate Variance = (Standard Rate - Actual Rate) x Actual hours = (2.40 - 210524/79030) x 79030 = $20852 Unfavorable Hope this helps!

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