Refer to Jewel Company. What is the variable overhead spending variance?
A) $24,000 U
B) $24,000 F
C) $136,900 U
D) $136,900 F

Question

Quizplus · Accepted Answer

The formula for variable overhead spending variance is (actual variable overhead rate - budgeted variable overhead rate) x actual hours worked. Based on the information given, actual variable overhead rate is $13 per hour ($1,300,000 ÷ 100,000 hours) and budgeted variable overhead rate is $12 per hour. The actual hours worked is given as 105,000. So, the variable overhead spending variance can be calculated as ($13 - $12) x 105,000 = $105,000 U. Therefore, the correct answer is C, $136,900 U (since it is an unfavorable variance, it should be U for over budget).