Pearle Corporation Makes Automotive Engines

question 166

Essay

Pearle Corporation makes automotive engines. For the most recent month, budgeted production was 3,300 engines. The standard power cost is $9.20 per machine-hour. The company's standards indicate that each engine requires 2.1 machine-hours. Actual production was 3,400 engines. Actual machine-hours were 7,160 machine-hours. Actual power cost totaled $61,815.
Required:
Determine the rate and efficiency variances for the variable overhead item power cost and indicate whether those variances are unfavorable or favorable. Show your work!

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