Underfoot Products uses standard costing. The following information about overhead was generated during May: $\begin{array}{ll}
\text { Standard variable overheadrate } & \$ 2 \text { per machine hour } \
\text { Standard fixed overhead rate } & \$ 1 \text { per machine hour } \
\text { Actual variable overhead costs } & \$ 389,000 \
\text { Actual fixed overhead costs } & \$ 175,000 \
\text { Budgeted fixed overhead costs } & \$ 190,000 \
\text { Standard machine hours per urit produced } & 10 \
\text { Good urits prochuced } & 18,000 \
\text { Actual machine hours } & 200,000
\end{array}$
Compute the variable overhead spending variance.

Question

Underfoot Products uses standard costing. The following information about overhead was generated during May: $\begin{array}{ll}
\text { Standard variable overheadrate } & \$ 2 \text { per machine hour } \
\text { Standard fixed overhead rate } & \$ 1 \text { per machine hour } \
\text { Actual variable overhead costs } & \$ 389,000 \
\text { Actual fixed overhead costs } & \$ 175,000 \
\text { Budgeted fixed overhead costs } & \$ 190,000 \
\text { Standard machine hours per urit produced } & 10 \
\text { Good urits prochuced } & 18,000 \
\text { Actual machine hours } & 200,000
\end{array}$
 Compute the variable overhead spending variance.

Quizplus · Accepted Answer

Variable overhead spending variance = (Actual variable overhead costs - (Standard variable overhead rate * Actual machine hours))= ($389,000 - ($2 * 200,000))= $389,000 - $400,000= $11,000 (F)

Underfoot Products Uses Standard Costing Compute the Variable Overhead Spending Variance