Answer to Question #181279 in Economics for Tanu

Question

Orlando Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended:

Actual units produced: 12,000

Actual variable overhead incurred: $77,700

Actual machine hours worked: 18,800

Standard variable overhead cost per machine hour: $4.50

If Orlando estimates 1.5 hours to manufacture a completed unit,

the company's variable-overhead spending variance is: 

Select one:

a. $3,600 unfavorable

b. $3,600 favorable

c. $6,900 unfavorable

d. $6,900 favorable

e. None of the answers is correct

Answer 1

$18,800*4.5=84.600$

$84,600-77,700=6,900$

Answer: d) $6,900 favorable