A. The volume variance is related to the fixed overhead and is the difference between the budgeted amount of fixed overhead and the amount of fixed overhead applied (standard rate × standard input for the actual level of output). The volume variance cannot be determined using the given set of data.
B. To solve this question, we need to calculate all the suggested variances possible from this set of data. It's better to start with most simple ones. The labor rate variance is: (Actual Rate - Standard Rate) × Actual Hours or (Actual Rate × Actual Hours) - (Standard Rate × Actual Hours).
The actual rate times the actual hours is $10,000. The standard rate times the actual hours is $9,800. The difference is $200 unfavorable. This is not the result we are looking for.
C. There is no such thing as a labor spending variance. Labor variances are either labor efficiency variances or labor rate variances.
The variable overhead spending variance is related to variable overhead and is the difference between the actual application rate and the standard application rate multiplied by the actual quantity of the application base (level of activity). This can also be calculated as the actual variable overhead incurred - (the actual usage of the application base × the standard variable overhead rate). This cannot be determined using the given set of data.
D. To solve this question, we need to calculate all the suggested variances possible from this set of data. It's better to start with most simple ones. The labor efficiency variance is: (Actual Hours - Standard Hours for Actual Output) × Standard Rate, or (Actual Hours × Standard Rate) - (Standard Hours for Actual Output × Standard Rate).
The actual hours times the standard rate is $9,800. The standard hours times the standard rate is $8,820. The difference is $980 unfavorable.
