Priority Company, Which Applies Overhead to Production on the Basis

Multiple Choice

Priority Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended: Actual units produced: 9,000 Actual variable overhead incurred: $54,400 Actual machine hours worked: 16,000 Standard variable overhead cost per machine hour: $3.50 If Priority estimates two hours to manufacture a completed unit, the company's variable-overhead efficiency variance is:

A) $1,600 favorable.
B) $1,600 unfavorable.
C) $7,000 favorable.
D) $7,000 unfavorable.
E) None of the answers is correct.