During the year, Plasticine produced 10,000 units, used 21,000 direct labour hours, and incurred variable overhead of $100,000. Budgeted variable overhead for the year was $88,000. The hours allowed per unit are 2.1. The standard variable overhead rate is $4.10 per direct labour hour. What was the variable overhead spending variance?
A) $2,000 U
B) $2,900 F
C) $4,100 U
D) $13,900 U

Question

Quizplus · Accepted Answer

Variable overhead spending variance = Actual variable overhead - (Standard variable overhead rate x Actual direct labour hours)

Actual variable overhead = $100,000 
Standard variable overhead rate = $4.10 per direct labour hour 
Actual direct labour hours = 21,000 
Allowed direct labour hours = 10,000 x 2.1 = 21,000

Variable overhead spending variance = $100,000 - ($4.10 x 21,000) = $13,900 U

During the Year, Plasticine Produced 10,000 Units, Used 21,000 Direct