Formidable Company Collected the Following Information Using the Three Variance Method, What Is the Spending Variance

question 13

Multiple Choice

Formidable Company collected the following information: $\begin{array}{ll}\text { Standard costs per unit: }\\\text { Variable overhead } & 4 \text { machine hours } @ \$ 6 \text { per machine hour } \\\text { Fixed overhead } & 4 \text { machine hours } @ \$ 10 \text { per machine hour }\\\\\text { Actual output } & 20,000 \text { units } \\\text { Denominator (normal capacity) output } & 21,000 \text { units } \\\text { Actual machine hours } & 79,000 \text { machine hours } \\\text { Actual variable overhead cost } & \$ 540,000 \\\text { Actual fixed overhead cost } & \$ 810,000\\\end{array}$ Using the three variance method, what is the spending variance?

• A)$36,000 (F)
• B)$30,000 (U)
• C)$36,000 (U)
• D)$30,000 (F)

---

Definitions:

Nomination Procedure

A formal process used to select candidates for positions, roles, or recognition, often involving voting or selection by a committee.

Productive Labor

Work that contributes to the production of goods and services in an economy, often associated with value creation.

Deliberate Teaching

The intentional act of teaching specific skills or knowledge through structured and planned activities or lessons.

Apprentices

Individuals who learn a trade or a craft from a skilled worker through hands-on experience, often combined with formal instruction.