Better Housewares, Inc. budgets its variable manufacturing overhead at a rate of $10 per unit (.5 hours at $20 per hour) for a product it makes. In February, the company made 12,000 units of that product. Actual direct labor hours used were 6,100, and actual variable overhead costs were $58,000. The overhead spending variance in February is: Question 38 options: $2,000 unfavorable $1,000 unfavorable $1,000 favorable. $2,000 favorable.
Better Housewares, Inc. budgets its variable manufacturing overhead at a rate of $10 per unit (.5 hours at $20 per hour) for a product it makes. In February, the company made 12,000 units of that product. Actual direct labor hours used were 6,100, and actual variable overhead costs were $58,000. The overhead spending variance in February is: Question 38 options: $2,000 unfavorable $1,000 unfavorable $1,000 favorable. $2,000 favorable.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Better Housewares, Inc. budgets its variable
manufacturing overhead at a rate of $10 per
unit (.5 hours at $20 per hour) for a product it
makes. In February, the company made
12,000 units of that product. Actual direct
labor hours used were 6,100, and actual
variable overhead costs were $58,000. The
overhead spending variance in February is:
Question 38 options: $2,000 unfavorable
$1,000 unfavorable $1,000 favorable. $2,000
favorable.
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