variable manufacturing overhead efficiency variance i
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
The Company designs and manufactures bathtubs for home and commercial applications. The Company recorded the following data for its commercial bathtub production line during the month of March:
| Standard DL hours per tub | 5 |
| Standard |
$6.00 |
| $30.00 | |
| | |
| Actual overhead costs | $21,375 |
| Actual DL hours | 2850 |
| Actual overhead cost per machine hour | $7.50 |
| | |
| Actual tubs produced | 1500 |
What is the variable manufacturing overhead efficiency variance in March?
|
$27,900 favorable |
||
|
$4275 unfavorable |
||
|
$27,900 unfavorable |
||
|
$4275 favorable |
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