Question

New Company has the following information available for variable overhead costs. Direct labor hours are the cost driver for variable overhead costs. Actual variable overhead costs $3,500 Standard variable overhead costs $1.50 per hour Actual direct labor hours 2,500 hours Standard direct labor hours per unit 5 hours Units produced 500 What is the variable overhead spending variance?

Answer 1

Variable overhead spending variance is $250 favorable.

Step-by-step explanation:

Variable overhead spending variance

SR = Standrad variable overhead cost =$1.50

AR= Actual variable overhead cost =$3,500

AH= Actual Hours work =2,500 hours

=(SR*AH)-AR

=(1.50*2,500)-3,500

=3,750 - 3,500

=$250 favorable