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:
a) Determine the rate and efficiency variances for the variable overhead item power cost and indicate whether those variances are unfavorable or favorable. (Input all amounts as positive values.)

Rate variance      = $4057  Favorable

Efficiency variance  = $184  unfavorable

Explanation:

Rate variance                                                                              $

7,160 hours should have cost (7,160 × $9.20)                    65872

bur did cost (actual cost)                                                     61,815

Rate variance                                                                        4057  Favorable

Efficiency variance

3400 units should have taken (3,400 × 2.1 hours)                     7140

but did take                                                                                 7,160

Efiicienct=y varince (hours)                                                         20 unfavorable

standard hour                                                                              ×$9.20

Efficiency variance                                                                  $184  unfavorable

Rate variance      = $4057  Favorable

Efficiency variance  = $184  unfavorable  

answer; synthetic production system;

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