A. This answer is incorrect. See the correct answer for a complete explanation.

B. This answer is incorrect. See the correct answer for a complete explanation.

C. This answer is incorrect. See the correct answer for a complete explanation.

D. The total variable overhead variance is equal to the difference between the actual variable overhead

incurred and the budgeted variable overhead. This is also called the flexible budget variance. The formula is: Actual Variable Overhead Incurred - Flexible Budget Variable Overhead Amount. Hence, the total variable overhead variance is $10,000 favorable ($80,000 - $90,000). This total variance may be broken down into the spending and efficiency variances. The variable overhead spending variance is given as $2,000 favorable. The variable overhead efficiency variance equals the total variable overhead variance minus the variable overhead spending variance, or $8,000 favorable ($10,000 - $2,000).

If the budgeted rate for applying variable manufacturing overhead was $20 per direct labor hour using direct labor hours as an activity base, this variance is equivalent to 400 direct labor hours ($8,000 ÷ $20). The number is positive which means the Tiny Tykes Corporation was 400 direct labor hours efficient.