Hi can someone help me understand why they did not incorporate the fixed spending variance in calculating the total overhead variance?
Harper Company's performance report indicated the following information for the past month.
Actual total overhead
Budgeted fixed overhead
Applied fixed overhead at $3 per labor hour Applied variable overhead at $.50 per labor hour
Actual labor hours
Harper's total overhead spending variance for the month was
a. $100,000 favorable.
b. $115,000 favorable.
c. $185,000 unfavorable.
d $200,000 unfavorable.
Correct answer b. Harper's total overhead spending variance is $115,000 favorable calculated as follows.
Variable overhead =
= $1,600,000 - $1,500,000
Actual total overhead – Fixed overhead = $100,000
Spending variance =
= (430,000 x $.50) - $100,000
(Input x Standard rate) – Actual variable overhead = $115,000 F
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Alyssa Marielle Enriquez
Other
Castro Valley CA
United States
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