A Manufacturing Company Has a Standard Costing System Based on Machine

question 187

Multiple Choice

A manufacturing company has a standard costing system based on machine hours (MHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
$\begin{array}{|l|r|}\hline \text { Denominator Level of Activity } & 6,100 \mathrm{MHs} \\\hline \text { Overhead Costs at the Denominator Activity Level: } & \\\hline \text { Variable Overhead Cost } & \$ 35,075 \\\hline \text { Fixed Overhead Cost } & \$ 77,775 \\\hline\end{array}$
The following data pertain to operations for the most recent period:
$\begin{array}{|l|r|}\hline \text { Actual Hours } & 6,300 \mathrm{MHs} \\\hline \text { Standard Hours Allowed for the Actual Output } & 5,994 \mathrm{MHs} \\\hline \text { Actual Total Variable Overhead Cost } & \$ 36,540 \\\hline \text { Actual Total Fixed Overhead Cost } & \$ 76,875 \\\hline\end{array}$
-What was the variable overhead efficiency variance for the period,rounded to the nearest dollar?

• A) $0.
• B) $2,075 unfavourable.
• C) $2.075 favourable.
• D) $1,760 unfavourable.

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