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Q. A company uses direct labor hours(DLH) as the measure of activity. Data from flexible budget is as follows: Denominator of Activity- 7,400 DLH Overhead

Q. A company uses direct labor hours(DLH) as the measure of activity. Data from flexible budget is as follows:

Denominator of Activity- 7,400 DLH

Overhead costs of denominator level of Activity:

Variable overhead costs- $56,980. Fixed overhead costs- $95,090.

The following data relate to operations in the last period:

Actual Hours- 7,800 DLH. Standard hours allowed for the actual output- 7,700 DLH. Actual total variable overhead costs- $58,890. Actual Fixed Overhead Costss- $95,990

Assuming the standard variable overhead rate is $7.70 per DLH, what is the variable overhead spending variance for the last period? Also tell if favourable or unfavorable?

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