Asked by Caleb Farris on Jul 17, 2024
Verified
What is the variable overhead spending variance for the month?
A) $2,870 F.
B) $1,715 U.
C) $1,715 F.
D) $2,870 U.
Variable Overhead Spending Variance
The difference between the actual variable overhead incurred and the expected (or standard) variable overhead based on the actual level of production activity.
Standard Variable Overhead Rate
The predetermined rate used to allocate variable manufacturing overhead to individual units of production.
Standard Hours
The predetermined amount of time expected to complete a unit of work or job, serving as a benchmark for productivity and performance measurement.
- Analyze the discrepancies in material and labor, regarding price, quantity, rate, and efficiency variances.
- Acquire knowledge on the process of applying overhead costs using standard costing systems.
Verified Answer
KW
Kendall WilkinsonJul 19, 2024
Final Answer :
B
Explanation :
The variable overhead spending variance is calculated as the difference between the actual variable overhead cost and the standard variable overhead cost for the actual hours worked. The standard cost for the actual hours (4,900 hours) is calculated as 4,900 hours * $11.55 per hour = $56,595. The actual variable overhead cost is $58,310. Therefore, the spending variance is $58,310 - $56,595 = $1,715 Unfavorable, because the actual cost was higher than the standard cost.
Learning Objectives
- Analyze the discrepancies in material and labor, regarding price, quantity, rate, and efficiency variances.
- Acquire knowledge on the process of applying overhead costs using standard costing systems.