Question

BLC has the following information with respect to variable manufacturing overhead for the month of June....

BLC has the following information with respect to variable manufacturing overhead for the month of June. The budget calls for 10,000 units to be produced using a total of 15,000 machine-hours. The variable overhead costs for the period are budgeted to be $180,000. During June, the actual output was 9,000 units. The total variable overhead costs were $171,000, and 14,000 machine-hours were actually used. BLC uses machine-hours to drive variable overhead.
What is the variable overhead spending variance for the month of June?

A. $3,000 favorable

B. $3,000 unfavorable

C. $9,000 favorable

D. $9,000 unfavorable

Business   Accounting   
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Answer #1

Variable overhead spending variance = Standard vaariable cost-Actual variable cost

                                                              = (15000/10000*9000*12) -171000

Variable overhead spending variance = 9000 U

So answer is d) $9000 Unfavorable

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