The NBV Company allocates both variable manufacturing overhead and fixed manufacturing overhead using direct labor hours as the allocation base. NBV expected to produce 40,000 units during the year and to use three direct labor hours to produce each unit. It budgeted $600,000 for variable manufacturing overhead and $1,200,000 for fixed manufacturing overhead. NBV actually produced 35,000 units and used 115,000 direct labor hours during the year. If NBV incurred $650,000 in variable manufacturing overhead costs and $950,000 in fixed manufacturing overhead costs, what is the variable manufacturing overhead spending variance? $75,000 favorable $50,000 unfavorable $50,000 favorable O $75,000 unfavorable

The NBV Company allocates both variable manufacturing overhead and fixed manufacturing overhead using direct labor hours as the allocation base. NBV expected to produce 40,000 units during the year and to use three direct labor hours to produce each unit. It budgeted $600,000 for variable manufacturing overhead and $1,200,000 for fixed manufacturing overhead. NBV actually produced 35,000 units and used 115,000 direct labor hours during the year. If NBV incurred $650,000 in variable manufacturing overhead costs and $950,000 in fixed manufacturing overhead costs, what is the variable manufacturing overhead spending variance? $75,000 favorable $50,000 unfavorable $50,000 favorable O $75,000 unfavorable

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Description: The NBV Company allocates both variable manufacturing overhead and fixed manufacturingoverhead using direct labor hours as the allocation base. NBV expected to produce 40,000 unitsduring the year and to use three direct labor hours to produce each u

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

The NBV Company allocates both variable manufacturing overhead and fixed manufacturing
overhead using direct labor hours as the allocation base. NBV expected to produce 40,000 units
during the year and to use three direct labor hours to produce each unit. It budgeted $600,000 for
variable manufacturing overhead and $1,200,000 for fixed manufacturing overhead. NBV actually
produced 35,000 units and used 115,000 direct labor hours during the year. If NBV incurred
$650,000 in variable manufacturing overhead costs and $950,000 in fixed manufacturing overhead
costs, what is the variable manufacturing overhead spending variance?
$75,000 favorable
$50,000 unfavorable
$50,000 favorable
O $75,000 unfavorable

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