Hey got a question for yall?
Calculating the variance is not a problem for me with any of these.
My issue is when do I compare the budgeted hours and when do I compare the standard hours, the same goes for when comparing materials to the budgeted/standard amounts.
Is it a terminology thing. Here's my most recent 50/50.
A company has gathered the following information from a recent production run:
Standard variable overhead rate $10
Actual variable overhead rate 8
Standard process hours 20
Actual process hours 25
What is the company's variable overhead spending variance?
A.
$50 unfavorable
B.
$50 favorable
C.
$40 unfavorable
Incorrect D.
$40 favorable
You answered D. The correct answer is B.
The variable overhead spending variance is the difference between the actual amount paid ($8) and standard overhead ($10) for the 25 actual hours. The difference of $2 multiplied by 25 actual hours gives $50. The variance is favorable because the actual cost ($8) was less than the standard cost ($10).
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