Genesis Company Genesis Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Genesis produced 5,000 units:
$\begin{array}{ll}\text { Standard: }\
\text { DLH per unit } & 3.00\
\text { Variable overhead per DLH } & \$ 1.80 \
\text { Fixed overhead per DLH } & \$ 3.25 \
\text { Budgeted variable overhead } & \$ 27,250\
\text { Budgeted fixed overhead } & \$ 49,500\\\text { Actual: }\
\text {Direct labor hours }&16,000\
\text { Variable overhead}&\$31,325\
\text { Fixed overhead}&\$49,750\
\end{array}$ Refer to Genesis Company.Using the four-variance approach,what is the variable overhead spending variance?
A)$2,525U
B)$4,075 F
C)$4,075 U
D)$4,325 U

Question

Quizplus · Accepted Answer

The variable overhead spending variance is calculated as the difference between the actual variable overhead and the standard variable overhead for the actual hours worked. The actual variable overhead is $31,325, and the standard variable overhead for 16,000 hours (actual hours) is 16,000 hours * $1.80 = $28,800. The variance is $31,325 - $28,800 = $2,525 unfavorable (U).

Genesis Company Genesis Company Uses a Standard Cost System for Its