Question
H&B Inc. uses a standard cost system and calculates their application rates using direct labour hours. This year the company had the following standards: Standard
H&B Inc. uses a standard cost system and calculates their application rates using direct labour hours.
This year the company had the following standards:
Standard direct labour hours per unit: 2 hours
Variable overhead application rate: $4 per direct labour hour
Fixed overhead application rate: $6 per direct labour hour
The company also had the following actuals:
Production: 16,000 units
Variable overhead: $141,312
Fixed overhead: $203,136
Total direct labour hours: 36,800
What is the variable overhead spending variance?
Question 4 options:
a)
$5,888 favourable
b)
$13,312 favourable
c)
$5,888 unfavourable
d)
$13,312 unfavourable
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