Abbott Has a Standard Variable Overhead Rate of $4

question 64

Multiple Choice

Abbott has a standard variable overhead rate of $4.50 per machine hour, and each unit produced has a standard time allowed of three hours. The company's static budget was based on 46,000 units. Actual results for the year follow.
Actual units produced: 42,000
Actual machine hours worked: 120,000
Actual variable overhead incurred: $520,000
Abbott's variable-overhead spending variance is:

• A) $20,000 favorable.
• B) $20,000 unfavorable.
• C) $27,000 favorable.
• D) $27,000 unfavorable.
• E) None of the other answers are correct.

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