Question

The following information is available from the Terry Company:

Actual total factory overhead cost incurred	$	37,000
Actual fixed overhead cost incurred	$	11,200
Budgeted fixed overhead expenses	$	21,000
Actual direct labor hours (DLH) worked		5,300
Standard DLHs for this period’s production (output)		4,800
Standard variable overhead rate per DLH	$	3.00
Standard fixed overhead rate per DLH	$	2.50

What is the total overhead spending variance for Terry Company for the period, to the nearest whole dollar?

• $100 unfavorable.

• $300 unfavorable.

• $500 unfavorable.

• $700 unfavorable.

• $1,300 unfavorable.

Answer 1

Answer :- $100 ( Unfavorable)

	Particulars	Actual
A.	Total overhead incurred	$37,000
B.	Fixed overhead incurred	$11,200
C.	Variable overhead incurred (A-B)	$25,800

A.	Fixed overhead variance = Standard fixed overhead - Actual fixed overhead
	= 21000- 11200
	= 9,800 (Favorable)
B.	Variable overhead variance = (Actual hours worked * standard variable overhead rate per hour) - Actual variable overhead
	= ($5,300   *3 ) - $25,800
	= $9,900 (unfavorable)
C.	Total Variance= $9,800 - $9,900
	= $100 unfavorable