25. Hermansen Corporation produces large commercial doors for warehouses and oth

Question

25. Hermansen 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 5,400 doors. According to standards, each door requires 3.8 machine-hours. The actual machine-hours for the month were 20,880 machine-hours. The standard supplies cost is $7.90 per machine-hour. The actual supplies cost for the month was $152,063. Supplies cost is an element of variable manufacturing overhead. The variable overhead efficiency variance for supplies cost is:

Multiple Choice

$2,844 U

$10,045 U

$2,844 F

$10,045 F

Explanation / Answer

Variable overhead efficiency variance = (Standard hours - Actual hours) x Standard rate
={(5,400 x 3.8) - 20,880) x $7.90
=  $2,844 U

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