Creger Corporation, which makes landing gears, has provided the following data for a recent month:
Required: Determine the rate and efficiency variances for the variable overhead item supplies and indicate whether those variances are favorable or unfavorable.

Variable overhead rate variance = (Actual hours × Actual rate) − (Actual hours × Standard rate)= $479,438 − (76,930 hours × $6.20 per hour)= $479,438 − $476,966= $2,472 UnfavorableStandard machine-hours allowed for the actual output = 9.3 hours per unit × 8,300 units = 77,190 hoursVariable overhead efficiency variance = (Actual hours − Standard hours) × Standard rate= (76,930 hours − 77,190 hours) × $6.20 per hour= (−260 hours) × $6.20 per hour= $1,612 Favorable