Fixed OH Efficiency Variance

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May 31, 2015 at 12:20 am #250777
Allison
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Could you please help me with this question?

Budget production 13120 units
Budget fixed OH $45,920
Budget hours 26,240 hours

Actual production 12920 units
Actual fixed OH $48,400
Actual hours 25,200 hours

Calculate fixed OH Efficiency Variance

I know the pro forma for this variance yet I am not arriving at the answer shown on the F5 mock exam…Perhaps I am calculating the rates wrong. I calculated standard rate as 45920/26240=$1.75. Is this correct? It would be interesting to see how you arrive at the answer. Thanks in advance.
May 31, 2015 at 10:46 am #250883
John Moffat
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Actual hours worked = 25,300.
Standard hours for actual production = 12920 units x 26240/13120 = 25840

So efficiency variance = (25,840 – 25,200) x $1.75 = $1,120 (Fav)
May 31, 2015 at 11:25 am #250910
Allison
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Thanks for your assistance. Let me just say that Open Tuition is doing an amazing job helping us students. Keep up the good work!
May 31, 2015 at 11:40 am #250923
John Moffat
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Thank you for your comments 🙂
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