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Pointe Claire Company applies overhead based on direct labour hours. Two direct labour hours are required...

Pointe Claire Company applies overhead based on direct labour hours. Two direct labour hours are required for each unit of product. Planned production for the period was set at 8,600 units. Manufacturing overhead is budgeted at $120,400 for the period (20% of this cost is fixed). The 16,500 hours worked during the period resulted in the production of 8,170 units. The variable manufacturing overhead cost incurred was $97,400 and the fixed manufacturing overhead cost was $28,900.


  

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Calculate the variable overhead spending variance for the period.

Variable overhead spending variance       $Entry field with incorrect answer   Entry field with correct answer

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Answer #1

Variable overhead spending variance = Standard variable overhead costs - Actual variable overhead costs

= 120400*80%*8170/8600 - 97400

= $5896 Unfavorable

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