The Following Standards for Variable Manufacturing Overhead Have Been Established

question 43

Multiple Choice

The following standards for variable manufacturing overhead have been established for a company that makes only one product: $\begin{array}{lccc}\text {Standard hours per unit of output}&\text {5.6 hours}\\\text {Standard variable overhead rate}&\text { \$ 12.00 per hour}\\\end{array}$
The following data pertain to operations for the last month: $\begin{array} { l r } \text { Actual hours } & 2,600 \text { hours } \\\text { Actual total variable overhead cost } & \$ 31,330 \\\text { Actual output } & 400 \text { units }\end{array}$ What was the variable overhead spending variance for the month?

• A) $130 favourable.
• B) $130 unfavourable.
• C) $4,338 unfavourable.
• D) $4,450 unfavourable.

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Definitions:

Real Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing and the true return on lending.

Inflation Rate

The growth rate of the overall cost level for goods and services, undermining the efficacy of monetary resources.

Spot Rate

The current price in the marketplace at which a given asset—such as a currency, commodity, or security—can be bought or sold for immediate delivery.

Forward Rate

The predetermined price for a transaction that will occur at a specific future date, used in the context of currency and interest rate markets.