Answer:
C. $4,500 favorable
Explanation:
Spending Variance is the difference between the actual and estimated value of the expense. In this question we need to calculate the variance of total manufacturing overhead.
Variable
Actual Variable cost = $60,500
Manufacturing overhead application rate = Budgeted overhead / Budgeted units = $50,000 / 10,000 units = $5 per unit
Applied Overhead = Actual production x application rate = 11,000 units x $5 = $55,000
Variance = $60,500 - $55,000 = $5,500 unfavorable
Fixed
Actual fixed overhead = $125,000
Budgeted Fixed overhead = $135,000
Variance = $135,000 - $125,000 = $10,000 Favorable
Total Variance = Variance of variable manufacturing overhead cost + Variance of fixed manufacturing overhead cost
Total Variance = $10,000 Favorable - $5,500 unfavorable
Total Variance = $4,500 Favorable
