Question

Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains to 2019: Denominator volume—number of units 8,000 Denominator volume—percent of capacity 80 % Denominator volume—standard direct labor hours (DLHs) 24,000 Budgeted variable factory overhead cost at denominator volume $ 104,100 Total standard factory overhead rate per DLH $ 15.10 During 2019, Bluecap worked 28,000 DLHs and manufactured 9,800 units. The actual factory overhead cost for the year was $14,000 greater than the flexible budget amount for the units produced, of which $7,000 was due to fixed factory overhead. In preparing a budget for 2020 Bluecap decided to raise the level of operation to 90% of capacity (a level it considers to be "practical capacity"), to manufacture 9,200 units at a budgeted total of 27,600 DLHs. The variable overhead spending variance in 2019 for Bluecap Co. (to the

nearest whole dollar) was: (Round your intermediate calculation to 2 decimal places.)

Multiple Choice

• $7,000 unfavorable.

• $9,636 unfavorable.

• $10,836 favorable.

• $13,076 unfavorable.

• $20,076 unfavorable.

Answer 1