Sanford Ltd. produces a product with the following standard cost card Direct mat

Question

Sanford Ltd. produces a product with the following standard cost card Direct materials (20 kg) Direct labour (10 hours) Variable overhead (10 hours) Fixed overhead (10 hours) $50.00 $84.00 $18.45 $35.00 The fixed overhead rate is based on a standard monthly volume of 15902 units. The actual results for the month of July 20x5 are as follows S620,000 Direct materials purchased and used (387500 kg) Direct labour (91976 hours) Variable overhead Fixed overhead Units produced and sold $1023000 337947 580000 15086 units What is Sanford's variable overhead spending variance for July 20x57 Note: a negative number represents an unfavourable variance and a positive number represents a favourable variance Select one a. S-363431 . $168251 X C $.168251 d. S-290895 The correct answer is $-168251

Explanation / Answer

Variable overhead spending variance = (Standard overhead rate*Actual hours-Actual variable overhead)

= (1.845*91976-337947)

Variable overhead spending variance = -168251

So answer is c) $-168251

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