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Moccasin Company manufactures a special spare part. Moccasin had an unfavorable variable overhead spending variance of $485 for the month of August. The actual variable overhead incurred for the month of August was $7,050, and the standard variable overhead rate was $5 per hour. Determine the actual direct labor hours worked in the month of August.

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Answer: 1,507 hours

Explanation:

Variable overhead spending variance = Actual variable spending - Budgeted variable spending

Variable overhead spending variance = Actual variable spending - (Actual labor hours * Standard variable overhead rate)

- 485 = 7,050 - (Actual labor hours * 5)

Actual labor hours * 5 = 7,050 + 485

Actual labor hours = 7,535 / 5

= 1,507 hours

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