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Gerhan Company's flexible budget for the units manufactured in May shows $15,640 of total factory...

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Accounting

Gerhan Company's flexible budget for the units manufactured in May shows $15,640 of total factory overhead; this output level represents 70% of available capacity. During May, the company applied overhead to production at the rate of $3.00 per direct labor hour (DLH), based on a denominator volume level of 6,120 DLHs, which represents 90% of available capacity. The company worked 5,000 DLHs and incurred $16,500 of total factory overhead cost during May, including $6,800 for fixed factory overhead.

Under a three-variance breakdown (decomposition) of the total overhead variance, what is the total factory overhead spending variance (to the nearest whole dollar) for May?

Multiple Choice

  • N/Athis variance does not exist in a three-variance analysis of the total overhead variance.

  • $300 favorable.

  • $380 unfavorable.

  • $480 unfavorable.

  • $1,160 unfavorable.

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