Problem:
Luis Corporation uses a standard cost system in which it applies manufacturing overhead to products on basis of machine hours (MH's). The company's standard requires 4 Machine Hours for each unit produced. Luis budgets to produce 1,100 units per month with a budgeted variable manufacturing overhead of $88,000 per month. During the last month, the company produced 1,000 units of product and incurred a total of $85,125 in Variable Manufacturing Overhead.
Required:
Question 1: If the Variable Manufacturing Overhead Efficiency Variance was $800 Favorable, what was the variable manufacturing overhead rate variance?
- $4,325 Favorable
- $4,325 Unfavorable
- $5,925 Unfavorable
- $5,925 Favorable
- None of Above
Note: Please show the work not just the answer.