Reference no: EM132951160

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

Problem 1: What is the variable overhead spending variance?

a) $760 unfavourable

b) $760 favourable

c) $2,760 unfavourable

d) $2,760 favourable