Question
Spring Forever is a manufacturer of designer rain boots. The cost of each pair of boots is the sum of three variable costs (direct material
Spring Forever is a manufacturer of designer rain boots. The cost of each pair of boots is the sum of three variable costs (direct material costs, direct manufacturing labor costs, and manufacturing overhead costs) and one fixed-cost category (manufacturing overhead costs). Variable and fixed manufacturing overhead cost is allocated to each pair on the basis of budgeted direct manufacturing labor-hours per pair. For March 2019, each pair is budgeted to take 3 labor-hours. The budgeted variable manufacturing overhead cost per labor-hour is $18. The budgeted number of pairs to be manufactured in March 2019 is 2,915.
Actual variable manufacturing costs in March 2019 were $135,565 for 2,854 pairs started and completed. There were no beginning or ending inventories of suits. Actual direct manufacturing labor-hours per unit were 2.5 hours. Fixed manufacturing overhead costs for March 2019 are budgeted, $104,940, and actual, $105,500.
How much is the efficiency variance for Variable manufacturing overhead for the month of March?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started