Bellingham, Inc. incurred the following during a recent period: $$\begin{array}{l}\begin{array} { l l l }
&\text { Actual } &\text {Standard }\
\text { Machine hours } & 1,350 & 1,425 \
\text { Units produced } & 570 & 570 \
\text { Variable overhead costs } & \$ 2,775& \$ 2,850
\end{array}
\end{array}$$ The variable overhead spending variance equals:
A) $75 Favourable
B) $150 Favourable
C) $0
D) $75 Unfavourable

Question

Bellingham, Inc. incurred the following during a recent period: $$\begin{array}{l}\begin{array} { l l l } 
&\text { Actual } &\text {Standard }\
\text { Machine hours } & 1,350 & 1,425 \
\text { Units produced } & 570 & 570 \
\text { Variable overhead costs } & \$ 2,775& \$ 2,850
\end{array}
\end{array}$$ The variable overhead spending variance equals:
A) $75 Favourable
B) $150 Favourable
C) $0
D) $75 Unfavourable

Quizplus · Accepted Answer

The variable overhead spending variance is calculated as the difference between the actual variable overhead costs and the standard variable overhead costs that should have been incurred for the actual level of activity. Given that the actual variable overhead costs are $2,775 and the standard costs are $2,850, the variance is $2,775 - $2,850 = -$75, indicating a $75 Unfavourable variance. This means the company spent $75 more than what was expected for the actual level of activity.

Bellingham, Inc The Variable Overhead Spending Variance Equals: A) $75 Favourable B)

Bellingham, Inc The Variable Overhead Spending Variance Equals:
A) $75 Favourable
B)