Question

In: Accounting

Dubberly Corporation's cost formula for its manufacturing overhead is $32,400 per month plus $54 per machine-hour....

Dubberly Corporation's cost formula for its manufacturing overhead is $32,400 per month plus $54 per machine-hour. For the month of March, the company planned for activity of 7,880 machine-hours, but the actual level of activity was 7,790 machine-hours. The actual manufacturing overhead for the month was $482,490.

The spending variance for manufacturing overhead in March would be closest to:

A)29,430 U

B)24,570 F

C)29,430

D)24,570 U

Expert Solution

Answer)

Calculation of spending variance for manufacturing overheads

Spending variance for manufacturing overheads = Standard manufacturing overhead for actual activity – Actual manufacturing overhead

= $ 453,060 - $ 482,490

= $ 29,430 (Unfavorable)

Therefor the spending variance for manufacturing overheads is $ 29,430 (Unfavorable) and the correct answer in the given question is option (A) $ 29,430 U

Working Note:

Calculation of Standard manufacturing overhead for actual activity

Standard manufacturing overhead for actual activity = Standard fixed manufacturing overhead + (Actual activity machine hours X Standard rate per machine hour)

= $ 32,400 + (7,790 hours X $ 54 per machine hour)

= $ 453,060

ekkarill92 answered 2 years ago

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