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Cooper Corporation produces decorator wall coverings.Budgeted production is 240,000 square feet per month,and the standard direct labor requirement to make this amount is 6,000 hours.All overhead is allocated based on direct labor hours.The following information is available:

-The overhead spending variance for the month in question was:
A)$250 unfavorable.
B)$2,500 unfavorable.
C)$875 favorable.
D)$3,375 unfavorable.

Question

[The following information applies to the questions displayed below.]
Cooper Corporation produces decorator wall coverings.Budgeted production is 240,000 square feet per month,and the standard direct labor requirement to make this amount is 6,000 hours.All overhead is allocated based on direct labor hours.The following information is available:
 
-The overhead spending variance for the month in question was:
A)$250 unfavorable. 
B)$2,500 unfavorable. 
C)$875 favorable. 
D)$3,375 unfavorable.

Quizplus · Accepted Answer

The overhead spending variance is calculated as the difference between actual overhead costs and budgeted overhead costs. The correct answer, $250 unfavorable, indicates that actual overhead costs exceeded budgeted costs by $250.

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