Reference no: EM133028187

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: $5 per direct labour hour

Fixed overhead application rate: $7 per direct labour hour

The company also had the following actuals:

Production: 17,000 units

Variable overhead: $195,840

Fixed overhead: $271,320

Total direct labour hours: 40,800

Required - What is the variable overhead spending variance?

a) $8,160 unfavourable

b) $25,840 unfavourable

c) $8,160 favourable

d) $25,840 favourable