What is the manufacturing overhead efficiency variance?
Chapter1: Financial Statements And Business Decisions
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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.
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Transcribed Image Text:Copr. Goedl The standards to produce one unit of FaEzzy are shown below. Quantity. Price Perunit Direct material (in ounces) 8, $1.15, $9.20 Direct labor 0.8, $16.00, $12.80 Manufacturing overhead (apply on machine hours) 2.5$0.10$0.25
Total standard cost per unit $22.25 The company actually produced 4,500 units. The actual number of machine hours used was 10,500 hours. The actual cost of manufacturing overhead was $1,575. What is the manufacturing overhead
efficiency variance? $187.50F $187.50 U $75F $75U

Transcribed Image Text:Copr. Goedl The standards to produce one unit of FaEzzy are shown below.
Direct material (in ounces)
Direct labor
Quantity Price
Per unit
8
$1.15 $9.20
0.8
$16.00 $12.80
Manufacturing overhead (apply on machine hours)
2.5 $0.10
$0.25
Total standard cost per unit
$22.25
The company actually produced 4,500 units. The actual number of machine hours used was
10,500 hours. The actual cost of manufacturing overhead was $1,575.
What is the manufacturing overhead efficiency variance?
O $187.50 F
O $187.50 U
O $75 F
O $75 U
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