25

Refer to Exhibit 10-5. What is the variable overhead spending variance for the indirect labor activity?

		$12,000 favorable
		$12,000 unfavorable
		$16,000 favorable
		$16,000 unfavorable
		None of the answer choices is correct.

Exhibit 10-5 Catalina Company uses activity-based costing to allocate variable manufacturing overhead costs to products. The company produced 1.800 units of product last month, and identified three activities with the following information for last month. Activity Standard Rate Standard Actual Actual Quantity per Unit Costs Quantity Produced 0.50 order per unit $78.000 1.000 orders Purchase $80 per order orders Product testing $10 per test minute Indirect labor $16 per direct labor hour 0.9 minutes per unit 5 hours per unit $28.000 2.000 test minutes $140,000 8,000 direct labor hours