PPv Topeka Manufacturing Corporation uses a standard cost system with machine-ho

Question

PPv Topeka Manufacturing Corporation uses a standard cost system with machine-hours as the activity base for overhead. The following information relates to production for last year Fixed Variable S Total budgeted overhead (at the denominator level of activity) Total applied overhead Total actual overhead 432,000S 684,000 S 410,400 S 649,800 s 456,000 s 655,500 The standard machine-hours allowed for actual output during the year were 7,600. The actual machine-hours were 7,500. 15 What was Topeka's variable overhead efficiency variance? $21,600 Favorable $51,000 Unfavorable $5,400 Favorable $5,472 Unfavorable None of the above Page 9 of 12

Explanation / Answer

Variable overhead efficiency variance = (Standard hour-actual hour)Standard rate

= (7600-7500)*54

Variable overhead efficiency variance = 5400 Favorable

so answer is c) $5400 favorable

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