Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours,

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Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours, and its standard costs per unit are as follows:

Direct materials: 5 kg at $8.00 per kg . Direct labour: 2 hours at $14 per hour.. Variable overhead: 2 hours at $5 per h


The company planned to produce and sell 25,000 units in March. However, during March the company actually produced and sold 30,000 units and incurred the following costs:

  • Purchased 160,000 kg of raw materials at a cost of $7 .50 per kg. All of this material was used in production.
  • Direct labour: 55,000 hours at a rate of $15.00 per hour.
  • Total variable manufacturing overhead for the month was $280,500.


Required

What is the variable overhead spending variance for March?

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Managerial Accounting

ISBN: 9781259275814

11th Canadian Edition

Authors: Ray H Garrison, Alan Webb, Theresa Libby

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