Tyro Company Has a Standard Cost System That Applies Manufacturing

question 59

Multiple Choice

Tyro Company has a standard cost system that applies manufacturing overhead to units of product on the basis of direct labour hours (DLHs) .The following information is available:
$\begin{array}{|l|r|}\hline \text { Actual Total Overhead Costs } & \$ 15,000 \\\hline \text { Actual Fixed Overhead Costs } & \$ 7,200 \\\hline \text { Budgeted Fixed Overhead Costs } & \$ 7,000 \\\hline \text { Actual Hours Worked } & 3,500 \text { DLHs } \\\hline \text { Standard Hours Allowed for the Output } & 3,800 \text { DLHs } \\\hline \text { Variable Overhead Rate } & \$ 2.50 \text { per DLH } \\\hline\end{array}$
Based on these data,what was the variable overhead spending variance?

• A) $750 unfavourable.
• B) $950 favourable.
• C) $1,500 unfavourable.
• D) $1,700 favourable.

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Definitions:

September

The ninth month of the year in the Gregorian calendar.

Variable Overhead Efficiency Variance

A metric that assesses the difference between the actual hours worked and the standard hours expected, multiplied by the variable overhead rate.

Variable Overhead Efficiency Variance

is the difference between the actual variable overhead incurred and the standard cost allocated, based on the efficiency of utilizing resources.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead and what the variable overhead costs should have been for the actual good units produced.