The following standards for variable manufacturing overhead have been establishe
ID: 2381029 • Letter: T
Question
The following standards for variable manufacturing overhead have been established for a company that makes only one product:
Standard hours per unit of output......8.0 hours
Standard variable overhead rate.........$11.55 per hour
The following data pertain to operations for the last month:
Actual hours ............ 7,000 hours
Actual total variable overhead cost...... $79,100
Actual output ....................... 600 units
What is the variable overhead spending variance for the month?
A. $23,660 U
B. $1,750 F
C. $24,860 U
D. $1,200 U
Explanation / Answer
variable overhead spending variance for the month = (7,000 hours x $11.55 per hour ) - $79,100
= $80850 - $79,100 = $1750 (F)
Hence option B is correct
B. $1,750 F