Ravena Labs., Inc. makes a single product which has the following standards: Dir

Question

Ravena Labs., Inc. makes a single product which has the following standards:
Direct Materials 2.5 ounces at $20 per ounce
Direct Labor 1.4 hours at $12.50 per hour
Var. Manuf. Overhead 1.4 hours at ? per hour

Variable Manuf. Overhead is applied on the basis of direct labor hours. The following data are available for October:
3750 units of compound were produced during the month.
There were no beginning direct materials inventory
The ending direct materials inventory was 2000 ounces
Direct materials purchased: 12000 ounces for $225,000
Direct labor hours worked: 5600 hours at a cost of $67,200
Variable Manufacturing Overhead costs incurred amounted to $18,200
Variable manufacturing overhead applied to products: $18,375

The variable overhead spending variance for October is:

Explanation / Answer

The variable overhead spending variance for October is =Variable Manufacturing Overhead costs +Variable manufacturing overhead applied to products++Direct labor hours worked cost =18200+18375+67200 =$103,775

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