Capital Manufacturing designs and manufactures bathtubs for home and commercial
ID: 2476777 • Letter: C
Question
Capital Manufacturing designs and manufactures bathtubs for home and commercial applications. Capital recorded the following data for its commercial bathtub production line during the month of March.
Standard DL hours per tub
3
Standard overhead rate per DL hour
$6.50
Standard overhead cost per unit
$19.50
Actual overhead costs
$22,750
Actual DL hours
3,250
Actual overhead cost per machine hour
$7.00
Actual tubs produced
1,100
What is the variable manufacturing overhead efficiency variance for March?
Standard DL hours per tub
3
Standard overhead rate per DL hour
$6.50
Standard overhead cost per unit
$19.50
Actual overhead costs
$22,750
Actual DL hours
3,250
Actual overhead cost per machine hour
$7.00
Actual tubs produced
1,100
Explanation / Answer
Standard overhead rate x (Actual hours - standard hours)
= Variable overhead efficiency variance
=6.50*(3,250-1,100*3)=-$325 Unfavorable.