Sampson Apparel Inc. Sampson Apparel Inc. incurred actual variable overhead expenses of $20,000 in the current year for the production of 5,000 units. Variable overhead was applied at a rate of $1.50 per direct labor hour and 2 direct labor hours were budgeted for each unit. The company used 9,000 direct labor hours for production.
Refer to the Sampson Apparel Inc. information above. What was Sampson's variable overhead spending variance?
A) $6,500 U
B) $6,500 F
C) $1,500 U
D) $1,500 F

Question

Quizplus · Accepted Answer

The formula for calculating variable overhead spending variance is:

Actual variable overhead - (Actual direct labor hours x Variable overhead rate per hour)

$20,000 - (9,000 x $1.50) = $6,500 unfavorable variance (U)