The production team for Take Eight, Inc., a manufacturer of pillow top mattresses, recently prepared a manufacturing cost budget for an output of 50,000 mattresses, as follows: Direct Materials $100,000 Direct Labor $50,000 Variable Overhead $75,000 Fixed Overhead $100,000 Actual costs incurred during the production of 60,000 mattresses were; direct materials, $110,000; direct labor, $60,000; variable overhead, $100,000; and fixed overhead, $97,000. If Take Eight evaluated performance by the use of a flexible budget, determine the dollar amount of the MOH flexible budget variance and if the variance is favorable or unfavorable.
A.$23,000 favorable
B.$3,000 unfavorable
C.$3,000 favorable
D.$7,000 unfavorable
E.$42,000 unfavorable

50,000 mattresses, as follows: Direct Materials $100,000 Direct Labor $50,000 Variable Overhead $75,000 Fixed Overhead $100,000 Actual costs incurred during the production of 60,000 mattresses were; direct materials, $110,000; direct labor, $60,000; variable overhead, $100,000; and fixed overhead, $97,000.

Variable Manufacturing overhead spending variance= (standard rate - actual rate)* actual quantity

Variable Manufacturing overhead spending variance= (1.5 - 1.6667)*60,000= $10,000 unfavorable

Fixed overhead variance= 100,000 - 97,000= 3,000 favorable

Total MOH variance= 7,000 unfavorable