Question: michelle inc uses a 4variance analysis of its manufacturing overhead...
Michelle Inc. uses a 4-variance analysis of its manufacturing
overhead costs, and has the following results for April.
A. Budgeted direct labour-hours per unit is used to allocate variable manufacturing overhead.
Fixed overhead is allocated on a per unit basis.
B. Budgeted amounts for April 2011 are:
Direct labour-hours 0.30 /Unit
Variable labour-hour overhead rate: $ 20.00 /DLH
Fixed manufacturing overhead: $600,000
Budgeted output (denominator level output): 30,000 Units
C. Actual amounts for April 2011 are:
Variable manufacturing overhead: $340,000
Fixed manufacturing overhead: $590,000
Direct labour-hours: 16,000 hours
Actual output: 40,000 Units
Question: Michelle, Inc. is in the process of evaluating its manufacturing overhead costs. What is the variable manufacturing overhead spending variance using 4-variance analysis?
a) $16,000 unfavourable
b) $20,000 unfavourable
c) $16,000 favourable
d) $28,500 favourable
e) $30,000 unfavourable