Answer (B) is correct . The variable overhead spending variance is the difference between actual variable overhead and the variable overhead based on the standard rate and the actual activity level. Thus, the variable overhead spending variance was $12,000 favorable [(94,000 actual hours × $8 standard rate) – $740,000 actual cost].
Answer (A) is incorrect because The variance of $60,000 favorable is based on 100,000 hours, not the actual hours of 94,000.
Answer (C) is incorrect because The variable overhead efficiency variance is $48,000 unfavorable.
Answer (D) is incorrect because The fixed overhead spending variance is $40,000 unfavorable.
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Water Control’s variable overhead spending variance for November was
