3. Kornfeld Corporation produces metal telephone poles. In the most recent month

Question

3. Kornfeld Corporation produces metal telephone poles. In the most recent month, the company budgeted production of 2,800 poles. Actual production was 3,200 poles. According to standards, each pole requires 2.2 machine-hours. The actual machine-hours for the month were 6,890 machine-hours. The standard variable manufacturing overhead rate is $9.20 per machine-hour. The actual variable manufacturing cost for the month was $67,020. The variable overhead efficiency variance is: A. $1,380 U B. $1,380 F C. $2,252 F D. $2,252 U

Explanation / Answer

Variable overhead efficiency variance = SVR(AH-SH) = 9.20*(6890 - 2.2*3200) = -1380 Answer: B. $1380 F

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