During the year, Octagon produced 8,000 units, used 24,000 direct labor hours, and incurred variable overhead of $120,000.Budgeted variable overhead for the year was $90,000.The hours allowed per unit are 2.The standard variable overhead rate is $3.00 per direct labor hour.The variable overhead spending variance is:
A) $54,000 F.
B) $61,000 U.
C) $48,000 U.
D) $27,000 U.
E) None of these

Question

Quizplus · Accepted Answer

Variable overhead spending variance = Actual variable overhead - (Standard variable overhead rate × Actual direct labor hours worked) = $120,000 - ($3.00 × 24,000) = $48,000 U

During the Year, Octagon Produced 8,000 Units, Used 24,000 Direct