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Chilton allocates variable manufacturing overhead costs on the basis of machine hours. Chilton budgeted .5 machine hours per lamp and allocates overhead at a rate of $1.80 per machine hour. Last year Chilton manufactured 23,000 lamps, used 13,800 machine hours and incurred actual overhead costs of $15,180.
Variable overhead efficiency variance Tells managers how much of the total variable MOH variance is due to using more or less of the allocation base than anticipated for the actual volume of output What does a favorable labor efficiency variance mean? Less labor was used than called for by standards Which budget comes first and which last in the master budget process for operating budgets?