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Refer to the exhibit.
SP, a manufacturing company, uses a standard costing system. The standard variable production overhead cost is based on the following budgeted figures for the year:
During the month of September, 5,300 actual hours were worked and 5,600 standard hours of output were produced. Total variable production overhead costs in September were $8,600.
What was the variable production overhead expenditure variance in September?
Suggested Answer: A
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27 comments · newest first
GR
Graciela
10 months ago
Are we sure about those budgeted figures? Seems off.
NA
Naomi
10 months ago
I think the variance is $650 adverse.
FA
Fatima
11 months ago
No way, it should be $200 favorable!
PE
Penney
11 months ago
Wait, how did they end up with a favorable variance?
MO
Mozell
11 months ago
The actual hours worked were 5,300.
IN
Inocencia
11 months ago
I believe the answer should be based on the difference between actual and budgeted rates, but I can't recall the exact figures we used in practice.
RI
Rikki
12 months ago
Wait, does the standard hours produced affect the variance calculation? I feel like I might be mixing up the concepts.
TR
Trinidad
12 months ago
I think the variable production overhead expenditure variance is calculated by comparing actual costs to standard costs based on actual hours worked.
FR
Frederica
12 months ago
I remember we practiced a similar question about variable overhead variances, but I'm not sure how to calculate the expenditure variance specifically.
KA
Kanisha
1 year ago
Ugh, I'm not feeling too confident about this one. Variable overhead variances always trip me up. I'll have to review the material and try some practice questions before the exam.
FL
Florinda
1 year ago
Okay, let me think this through step-by-step. I need to calculate the variable overhead rate, then use that to find the expected variable overhead for the standard hours, and compare that to the actual variable overhead. I've got this!
OS
Osvaldo
1 year ago
Hmm, I'm a bit unsure about this one. I need to make sure I understand the difference between standard hours and actual hours, and how that factors into the variable overhead variance.
CL
Clare
1 year ago
This looks like a standard variable overhead variance calculation, so I should be able to handle this. I just need to remember the formula and plug in the numbers.
LO
Lou
1 year ago
I believe the answer is D) $200 favourable, as the actual costs were lower than expected.
YU
Yuki
1 year ago
I agree with Regenia, because the actual costs were lower than the standard costs.
LO
Lorean
1 year ago
Ah, the joys of standard costing systems. Where the budgets are made up and the variances don't matter... or do they? This one's got my accounting senses tingling. Time to channel my inner bean counter and crack this case wide open.
KA
Kanisha
1 year ago
B) $650 favourable
CH
Cherry
1 year ago
A) $650 adverse
RE
Regenia
1 year ago
I think the answer is B) $650 favourable.
JU
Justine
1 year ago
Variable production overhead, huh? Sounds like a fancy way of saying 'the stuff that costs money but isn't directly related to the product.' Alright, let's see if I can figure this out before my brain starts to hurt. *cracks knuckles* Time to get my nerd on.
TA
Tammi
1 year ago
B) $650 favourable
GE
Gene
1 year ago
A) $650 adverse
RO
Rocco
1 year ago
Ooh, this one's got some numbers to play with. I bet the answer's in the variable production overhead costs. Gotta love a good ol' variance analysis, am I right? Let's see if I can outsmart the test-makers on this one.
IN
Inocencia
1 year ago
Hmm, let's see. The variable production overhead cost is based on the budgeted figures, and we have the actual hours worked and the standard hours of output. I think the key is to find the difference between the actual and budgeted variable overhead costs. Time to put on my accounting hat and crunch some numbers!
TR
Tresa
1 year ago
That makes sense, the difference between actual and budgeted costs resulted in an adverse variance.
LA
Lashaunda
1 year ago
Hmm, it looks like the variable production overhead expenditure variance in September was $650 adverse.
SH
Shonda
1 year ago
A) $650 adverse