Question

The company considers 4,000 direct labor hours or 100 fences to be its normal monthly capacity. Its standard variable overhead rate is $9 per direct labor hour. During the current month, $33,500 of variable overhead costs were incurred in working 3,800 direct labor hours to complete 92 fences. What is the variable overhead spending variance

Answer 1

Answer:

the variable overhead spending variance is $700 favorable

Explanation:

The computation of the variable overhead spending variance is shown below:

The variable overhead spending variance is

= (standard rate - actual rate) × actual labor hours

= ($9 - $33,500 ÷ 3,800) × 3,800

= $700 favorable

hence, the variable overhead spending variance is $700 favorable

The above formula should be applied for the same