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Question - H&B Inc. uses a standard cost system and calculates their application rates using direct labour hours. This year the company had the following standards:
Standard direct labour hours per unit: 2 hours
Variable overhead application rate: $2 per direct labour hour
Fixed overhead application rate: $5 per direct labour hour
The company also had the following actuals:
Production: 12,000 units
Variable overhead: $48,760
Fixed overhead: $125,350
Total direct labour hours: 23,000
Required - What is the variable overhead spending variance?
a) $760 unfavourable
b) $760 favourable
c) $2,760 unfavourable
d) $2,760 favourable
Selected comparative financial statements of Haroun Company follow.
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