Jemco Corporation Makes Automotive Engines

question 40

Essay

Jemco Corporation makes automotive engines. For the most recent month, budgeted production was 6,000 engines. The standard power cost is $8.80 per machine-hour. The company's standards indicate that each engine requires 6.1 machine-hours. Actual production was 6,400 engines. Actual machine-hours were 38,730 machine-hours. Actual power cost totaled $350,628.
Required:
Determine the rate and efficiency variances for the variable overhead power cost and indicate whether those variances are unfavorable or favorable. Show your work.

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Definitions:

Work in Process

Goods that are in various stages of the manufacturing process but are not yet completed, representing a component of a company's inventory.

Raw Materials Inventory

The stock of materials used in the manufacturing process before they are transformed into finished goods.

Manufacturing Costs

Expenses directly related to the production of goods, including direct labor, direct materials, and manufacturing overhead.

Job Order Cost System

An accounting system used to accumulate costs and assign them to specific jobs or orders, facilitating detailed cost tracking and analysis.