Question
OutToGetYou, Corp. uses the following standard costs to produce each unit of output of their product: Standard Price (or Rate) Standard Quantity (or DL hours)
OutToGetYou, Corp. uses the following standard costs to produce each unit of output of their product:
| Standard Price (or Rate) | Standard Quantity (or DL hours) |
Direct Materials | $2.00 per gram | 4.5 grams |
Direct Labor | $12.00 per DL hour | 0.75 DL hours |
Variable Factory OH | $3.60 per DL hour | 0.75 DL hours |
Fixed Factory OH | $2.40 per DL hour | 0.75 DL hours |
The company had budgeted production of 20,000 units of output and budgeted using 15,000 DL hours. Factory OH standard rates are calculated based on budgeted DL hours.
During the latest month, the company actually produced 18,000 units. To produce the 18,000 units, the firm purchased and used 73,800 grams of direct materials at a total cost of $132,840. Direct labor costs for the month totaled $188,640 based on 14,400 actual direct labor hours worked. Variable factory overhead costs incurred totaled $49,680 and fixed factory overhead incurred was $35,500. Based on this information, the variable OH spending variance for the month was:
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started