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John Williams, manager of Phoenix Entertainment, wants to compute the variable overhead efficiency variance for the year. He has the following details: Variable overhead flexible budget variance (unfavorable) $23,625 Budgeted input quantity allowed for actual output 9,000 units Actual input quantity used of cost-allocation base used 10,125 units Budgeted variable overhead cost per unit of cost- allocation base $30 Actual variable overhead cost per unit of cost- allocation base $29 What will be the variable overhead efficiency variance for the year

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emaduet2012

Answer:

2nd option is correct.

Explanation:

Variable over head       =     (Actual  Qty.  - Standard Qty. ) * Standard cost

Efficiency variance

                                      = (10125-9000) * 30

                                      =  $ 33750 (Un-Favorable)

2nd option is correct.

Variance is unfavorable because actual quantity used to produce is more than budgeted quantity allowed at that level of production.

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