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ABC Corporation manufactured 21,000 air conditioners during November. Direct materials cost of 21,000 air conditioners...

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Accounting

ABC Corporation manufactured 21,000 air conditioners during November. Direct materials cost of 21,000 air conditioners is $700,000 and direct manufacturing labor cost incurred is $750,000. The manufacturing overhead cost-allocation base is $34.25 per machine-hour. The following variable overhead data pertain to November:

Actual

Production: 21,000 units

Machine-hours: 13,300 hours

Variable overhead cost per machine-hour: $34.00

Budgeted

Production: 24,000 units

Machine-hours: 14,400 hours

Variable overhead cost per machine-hour: $34.25

What is the effect of the variable overhead spending variance on gross profit?

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