The Following Standards for Variable Manufacturing Overhead Have Been Established $\quad$

question 51

Multiple Choice

The following standards for variable manufacturing overhead have been established for a company that makes only one product:Standard hours per unit of output $\quad$$\quad$ 7.0 hours
Standard variable overhead rate $\quad$$\quad$ £ 11.35 per hour
The following data pertain to operations for the last month: $\begin{array}{ll}\text { Actual hours } & 7,500 \text { hours } \\\text { Actual total variable overhead cost } & £ 87,000 \\\text { Actual output } & 1,000 \text { units }\end{array}$
- What is the variable overhead spending variance for the month

• A)£7,550 F
• B)£7,550 U
• C)£1,875 F
• D)£1,875 U

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Definitions:

Cost

The amount of money or resources expended to obtain, produce, or maintain an object or service.

Sales

The revenue a company earns from selling goods or services.

Gross Profit

The difference between sales revenue and the cost of goods sold, before deducting operating expenses, interest, and taxes.

Expense

Outflows or using up of assets as a result of the company’s efforts to generate revenue.