Bondi Corporation makes automotive engines. For the most recent month, budgeted production was 3,500 engines. The standard power cost is $1.50 per machine-hour. The company's standards indicate that each engine requires 11.3 machine-hours. Actual production was 3,800 engines. Actual machine-hours were 41,340 machine-hours. Actual power cost totaled $66,642. Required: Determine the rate and efficiency variances for the variable overhead item power cost and indicate whether those variances are unfavorable or favorable. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Variable Overhead Rate Variance : ? Variable Overhead efficiency Variance: ?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Bondi Corporation makes automotive engines. For the most recent month, budgeted production was 3,500 engines. The
Required:
Determine the rate and efficiency variances for the variable overhead item power cost and indicate whether those variances are unfavorable or favorable.
(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Variable Overhead Rate Variance : ?
Variable Overhead efficiency Variance: ?
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