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Managerial Accounting

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Moderate

Overhead Spending for ink cartridges

MGRACT-W41FXG

Remaxx Corp manufactures ink cartridges for sale to retailers and wholesalers. The standard number of hours required to manufacture a shipment of ink cartridges is 900 direct labor hours. Remaxx uses direct labor hours to charge variable overhead. The same number of hours is used to charge variable manufacturing overhead. The variable overhead rate is \$23.50 per hour. The actual hours incurred were 950 and the actual variable overhead incurred \$22,847.50.

What is the variable overhead manufacturing spending variance?

A

$522.50 Favorable

B

$1,697.50 Unfavorable

C

$1,697.50 Favorable

D

$1,175 Unfavorable