Zero Company's standard factory overhead rate is $3.75 per direct labor hour (DLH), calculated at 90% capacity = 900 standard DLHs. In December, the company operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at 80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300 was for fixed factory overhead.

Under a four-way breakdown (decomposition) of the total overhead variance, what is the variable factory overhead spending variance for Zero Company for December (to the nearest whole dollar)?
A) $50 favorable.
B) $225 favorable.
C) $425 unfavorable.
D) $610 unfavorable.
E) $650 unfavorable.

Question

Zero Company's standard factory overhead rate is $3.75 per direct labor hour (DLH) , calculated at 90% capacity = 900 standard DLHs. In December, the company operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at 80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300 was for fixed factory overhead.

Under a four-way breakdown (decomposition) of the total overhead variance, what is the variable factory overhead spending variance for Zero Company for December (to the nearest whole dollar) ?

Under a four-way breakdown (decomposition) of the total overhead variance, what is the variable factory overhead spending variance for Zero Company for December (to the nearest whole dollar)?
A) $50 favorable.
B) $225 favorable.
C) $425 unfavorable.
D) $610 unfavorable.
E) $650 unfavorable.

Quizplus · Accepted Answer

The Answer of Zero Company's standard factory overhead rate is $3.75 per direct labor hour (DLH), calculated at 90% capacity = 900 standard DLHs. In December, the company operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at 80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300 was for fixed factory overhead.

Under a four-way breakdown (decomposition) of the total overhead variance, what is the variable factory overhead spending variance for Zero Company for December (to the nearest whole dollar)?
A) $50 favorable.
B) $225 favorable.
C) $425 unfavorable.
D) $610 unfavorable.
E) $650 unfavorable.

Zero Company's Standard Factory Overhead Rate Is $3