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Assume the following information appears in the standard cost card for a company that makes only one product: Standard Quantity or Hours Standard Price or

Assume the following information appears in the standard cost card for a company that makes only one product:

Standard Quantity or Hours Standard Price or Rate Standard Cost
Direct materials 5 pounds $ 11.00 per pound $ 55.00
Direct labor 2 hours $ 17.00 per hour $ 34.00
Variable manufacturing overhead 2 hours $ 3.00 per hour $ 6.00

During the most recent period, the following additional information was available:

  • 20,000 pounds of material was purchased at a cost of $10.50 per pound.
  • All of the material that was purchased was used to produce 3,900 units.
  • 8,000 direct labor-hours were recorded at a total cost of $132,000.
  • The actual variable overhead cost incurred during the period was $25,000.

Assuming the company uses direct labor-hours to compute its predetermined overhead rate, what is the variable overhead spending variance?

Garrison 17e Rechecks 2020-09-29

Multiple Choice

  • $1,600 F

  • $1,600 U

  • $1,000 U

  • $1,000 F

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