Raff Co Has a Standard Cost System in Which Manufacturing Overhead

question 61

Multiple Choice

Raff Co. has a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labour hours (DLHs) . The following standards are based on 100,000 direct labour hours:
$\begin{array}{l|l|}\hline \text { Variable Overhead } & 2 \text { DLHs @ \$3 per DLH }=\$ 6 \text { per unit } \\\hline \text { Fixed Overhead } & 2 \text { DLHs @ \$4 per DLH }=\$ 8 \text { per unit } \\\hline\end{array}$
The following information pertains operations during March:
$\begin{array}{|l|r|}\hline \text { Units Actually Produced } & 38,000 \\\hline \text { Actual Direct Labour Hours Worked } & 80,000 \\\hline\end{array}$

$\begin{array}{|l|r|}\hline \text { Actual Manufacturing Overhead Incurred: } & \\\hline \text { Variable Overhead } & \$ 250,000 \\\hline \text { Fixed Overhead } & \$ 384,000 \\\hline\end{array}$
-For March,what was the variable overhead spending variance?

• A) $6,000 favourable.
• B) $10,000 unfavourable.
• C) $12,000 unfavourable.
• D) $22,000 favourable.

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