Choice "D" is correct. The variable overhead spending variance compares the amount of actual variable overhead expense to the variable overhead that would have been applied at actual. If less was applied than was actually spent, the results are unfavorable.
Actual hours | 4,500 |
Application rate | $8 |
| Total actual | (36,000) |
Actual hours | 4,500 |
Application rate | $7.50 |
| Total actual @ Standard | 33,750 |
Variable efficiency variance | $(2,250) |
Choice "a" is incorrect. The variance is unfavorable not favorable, per the discussion above.Choice "b" is incorrect. The proposed answer incorrectly takes the difference in hours times actual hours. In addition, the computation presumes a favorable rather than unfavorable result.Choice "c" is incorrect. The proposed answer incorrectly takes the difference in hours times actual hours.
