Question

he management of Green Energy Manufacturing is analyzing variable overhead variances for the fiscal period just ended. The flexible budget called for $176,000 in variable overhead but actual variable overhead was $100,000. In computing the overhead variances, Green's management discovered that it had used 40,000 pounds of direct material, rather than the budgeted amount of 44,000 pounds. (Pounds of direct material is the single overhead driver of variable overhead). The standard variable overhead rate per pound of direct material is $2.00. What is Green's variable overhead spending variance

Answer 1

See below

Step-by-step explanation:

With regards to the above, Green's variable overhead spending variance is computed as

= Flexible budget - Actual variable overhead.

Given that

Flexible budget in variable overhead = $176,000

Actual variable overhead = $100,000

Therefore,

Variable overhead spending variance

= $176,000 - $100,000

= $76,000 F