Underfoot Products uses standard costing. The following information about overhead was generated during May: $\begin{array}{ll}
\text { Standard variable overhead rate } & \$ 2 \text { per machine hour } \
\text { Standard fixed overhead rate } & \$ 1 \text { per machine hour } \
\text { Actual variable overhead costs } & \$ 381,000 \
\text { Actual fixed overhead costs } & \$ 175,000 \
\text { Budgeted fixed overhead costs } & \$ 190,000 \
\text { Standard machine hours per unit produced } & 10 \
\text { Good units produced } & 18,000 \
\text { Actual machine hours } & 200,000
\end{array}$ Compute the variable overhead spending variance.
A) $19,000 (F)
B) $19,000 (U)
C) $39,000 (F)
D) $49,000 (F)

Question

Quizplus · Accepted Answer

Variable overhead spending variance = (Actual variable overhead costs - (Standard variable overhead rate * Actual machine hours))= ($381,000 - ($2 * 200,000))= ($381,000 - $400,000)= $19,000 (F)

Underfoot Products Uses Standard Costing Compute the Variable Overhead Spending Variance