CIMA BA2 · Chapter 7 · Question 6 of 14
Variable production overheads are absorbed at $6 per labour hour worked. In a period, 4,700 labour hours were worked and actual variable overheads were $29,000. What is the variable overhead EXPENDITURE variance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $800 adverse
Explanation
Expected variable overhead for the hours actually worked = 4,700 x $6 = $28,200. Actual expenditure = $29,000. Expenditure variance = $29,000 - $28,200 = $800 adverse, because more was spent than standard for the hours worked.
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