Refer to Exhibit 10-5. What is the variable overhead spending variance for the purchase order activity?

1. $2,000 favorable
2. $2,000 unfavorable
3. $8,000 favorable
4. $8,000 unfavorable
5. None of the answer choices is correct.

Transcribed Image Text:

Catalina Company uses activity-based costing to allocate variable manufacturing overhead costs to products. The company produced 1,800 units of product last month, and identified three activities with the following information for last month. Standard Actual Actual Quantity per Unit Produced 0.50 order per unit S78,000 1,000 orders Activity Standard Rate Costs Quantity Purchase $80 per order orders Product testing $10 per test 0.9 minutes per unit 5 hours per unit $28,000 2,000 test minutes minute Indirect labor $16 per direct $140,000 8,000 direct labor hour labor hours Catalina Company uses activity-based costing to allocate variable manufacturing overhead costs to products. The company produced 1,800 units of product last month, and identified three activities with the following information for last month. Standard Actual Actual Quantity per Unit Produced 0.50 order per unit S78,000 1,000 orders Activity Standard Rate Costs Quantity Purchase $80 per order orders Product testing $10 per test 0.9 minutes per unit 5 hours per unit $28,000 2,000 test minutes minute Indirect labor $16 per direct $140,000 8,000 direct labor hour labor hours

Answer rating: 100% (QA)

Answer Standard variable price 80 Actual Varia... View the full answer