Question
Dexter Company, which produces a single product, has the following standard cost and actual cost information: Standard cost: Direct materials ( 8 pounds @ $2.5/lb)
Dexter Company, which produces a single product, has the following standard cost and actual cost information:
Standard cost:
Direct materials ( 8 pounds @ $2.5/lb) | $20 |
Direct labor (3 direct labor hours @$12/hour) | 36 |
Manufacturing OH (3 DLH @ $10/DLH) | 30 |
Total | $86 |
Dexter Company assigns overhead (OH) cost based on direct labor hours (DLH). The $10/DLH pre-determined overhead rate is determined as follows: $7/DLH variable OH and $3/DLH fixed OH ($2,160/720DLH). 720 DLH reflects the capacity hours of producing 240 units (240 units X 3DLH/unit). Please note that it takes three direct labor hours to produce each unit of product.
During the period, 230 units were produced at the following cost:
Direct materials (1900 pounds @ $2.6/lb) | $4,940 |
Direct labor (700 hours @$11.60/hour) | 8,120 |
Manufacturing OH ($4,300 variable OH and $2,000 fixed OH) | 6,300 |
Total | $19,360 |
Compute the variable overhead spending variance (please use a negative sign if the variance is unfavorable. For example, if there is an unfavorable variance of $500, write -500. If there is a favorable variance of $500, write 500. Don't use $ signs in writing your answer)
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