Answer the Following Questions Using the Information Below:
Hobart Corporation

question 77

Multiple Choice

Answer the following questions using the information below:
Hobart Corporation manufactured 20 000 heaters during November.The overhead cost-allocation base is $15.75 per machine-hour.The following variable overhead data pertain to November:
$$\begin{array} { l r r } & \text { Actual } & \text { Budgeted } \\\text { Production } & 20000 \text { units } & 22000 \text { units } \\\text { Machine-hours } & 7875 \text { hours } & 9000 \text { hours } \\\text { Variable overhead cost per machine-hour: } & \$ 15.50 & \$ 15.75\end{array}$$
-What is the variable overhead spending variance?

• A)$1968.75 unfavourable
• B)$2250 unfavourable
• C)$2250 favourable
• D)$1968.75 favourable

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Definitions:

Net Realizable Value

The estimated selling price in the ordinary course of business, minus any costs of completion, disposal, and transport.

Going Concern

An accounting principle where it's assumed that a company will continue in business for the foreseeable future without the need to cease operations or liquidate assets.

Pledged Assets

Assets that are pledged as security or collateral for a loan or obligation, ensuring the lender has a claim to the asset in case of default.

Accounts Payable

Short-term obligations or debts a company owes to its suppliers or creditors.