BLC has the tollowing intormation with respect to variable manufacturing overhea

Question

BLC has the tollowing intormation with respect to variable manufacturing overhead for the month of June. The budget calls for 10,000 units to be produced using a total of 15,000 machine-hours. The variable overhead costs for the period are budgeted to be $180,000. During June, the actual output was 9,000 units. The total variable overhead costs were $171,000, and 14,000 machine-hours were actually used. BLC uses machine-hours to drive variable overhead What is the variable overhead spending variance for the month of June? $3,000 favorable $3,000 unfavorable S9,000 favorable $9,000 unfavorable

Explanation / Answer

Answer : $3,000 unfavorable

Explanation :

Standard Rate = Budgeted variable overhead costs / Budgeted mahine hours

= $180,000 / 15,000 mahine hours = $12 per machine hour.

Variable Overhead Spending Variance

= Actual variable overhead cost - ( Standard Rate * Actual machine hours used)

= $171,000 - ( $12 * 14,000 hrs) = $171,000 - $168,000 = $3,000 unfavorable.

Note : Since actual variable cost is more than the total variable cost as per standard rate . thus the resultant Variable Overhead Spending Variance is unfavorable.

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.