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

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andromache andromache · Answer 1 · 2021-05-21T04:11:02+02:00

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