Answer (A) is correct . The spending variance is the difference between the actual total overhead and the sum of budgeted fixed overhead and the variable overhead budgeted for the actual input. The total actual overhead is $140,000 ($106,250 + $33,750). The sum of budgeted fixed overhead and variable overhead budgeted for the actual input is $131,250 ($100,000 + $31,250). Thus, the total spending variance is $8,750 ($140,000 – $131,250). The variance is unfavorable because the actual overhead exceeds the budgeted overhead.
Answer (B) is incorrect because The difference between the actual and budgeted variable overhead is $6,250.
Answer (C) is incorrect because The difference between the fixed and variable components of the variance is $3,750.
Answer (D) is incorrect because The difference between the actual and budgeted fixed overhead is $2,500.
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What was the department’s total spending variance for June?
