Adizero Ltd uses a standard cost system. Indirect costs were budgeted at $200,000 plus $15 per direct labour hour. The overhead rate is based on 10,000 hours. Actual results were: $\begin{array}{lr}
\text { Standard direct labour hours } & 9,000 \
\text { Actual direct labour hours } & 10,000 \
\text { Fixed overhead } & \$ 190,000 \
\text { Variable overhead } & \$ 185,000
\end{array}$
The variable overhead spending variance was:
A) $10,000 F
B) $50,000 U
C) $35,000 U
D) $15,000 U

Question

Adizero Ltd uses a standard cost system. Indirect costs were budgeted at $200,000 plus $15 per direct labour hour. The overhead rate is based on 10,000 hours. Actual results were: $\begin{array}{lr}
\text { Standard direct labour hours } & 9,000 \
\text { Actual direct labour hours } & 10,000 \
\text { Fixed overhead } & \$ 190,000 \
\text { Variable overhead } & \$ 185,000
\end{array}$ 
The variable overhead spending variance was:
A) $10,000 F
B) $50,000 U
C) $35,000 U
D) $15,000 U

Quizplus · Accepted Answer

Variable overhead spending variance = (Actual variable overhead - (Standard variable overhead rate x Actual direct labour hours))= (185,000 - (15 x 10,000))= (185,000 - 150,000)= $35,000 U

Adizero Ltd Uses a Standard Cost System The Variable Overhead Spending Variance Was: A) $10,000 F B)

Adizero Ltd Uses a Standard Cost System The Variable Overhead Spending Variance Was:
A) $10,000 F
B)