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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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