Answer the following questions using the information below:
Neocomfort Corporation manufactured 3,000 chairs during June. The following variable overhead data relates to June:
$\begin{array}{ll}
\text { Budgeted variable overhead cost per unit } & \$ 12.00 \
\text { Actual variable manufacturing overhead cost } & \$ 49,900 \
\text { Flexible-budget amount for variable manufacturing overhead } & \$ 47,800 \
\text { Variable manufacturing overhead efficiency variance } & \$ 720 \text { unfavorable }
\end{array}$
-What is the variable overhead spending variance?
A) $1,380 favorable
B) $2,820 favorable
C) $2,820 unfavorable
D) $1,380 unfavorable

Question

Answer the following questions using the information below:
Neocomfort Corporation manufactured 3,000 chairs during June. The following variable overhead data relates to June:
 $\begin{array}{ll}
\text { Budgeted variable overhead cost per unit } & \$ 12.00 \
\text { Actual variable manufacturing overhead cost } & \$ 49,900 \
\text { Flexible-budget amount for variable manufacturing overhead } & \$ 47,800 \
\text { Variable manufacturing overhead efficiency variance } & \$ 720 \text { unfavorable }
\end{array}$
-What is the variable overhead spending variance?
A) $1,380 favorable
B) $2,820 favorable
C) $2,820 unfavorable
D) $1,380 unfavorable

Quizplus · Accepted Answer

The variable overhead spending variance is calculated as the difference between the actual variable overhead cost and the flexible-budget amount. Here, it is $49,900 (actual) - $47,800 (flexible-budget) = $2,100 unfavorable. However, considering the efficiency variance of $720 unfavorable, the spending variance is $2,100 - $720 = $1,380 unfavorable.

Answer the Following Questions Using the Information Below: Neocomfort Corporation

Answer the Following Questions Using the Information Below:
Neocomfort Corporation