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Answer :
The spending variance for manufacturing overhead in March for Dubberly Corporation is $27,210 unfavorable (option a).
The spending variance represents the difference between the actual manufacturing overhead costs incurred and the budgeted or planned costs. In this case, the budgeted manufacturing overhead cost is calculated using the cost formula provided: $31,200 per month plus $51 per machine-hour.
To calculate the budgeted manufacturing overhead cost for March, we use the planned activity level of 8,020 machine-hours.
Budgeted Manufacturing Overhead Cost = $31,200 + ($51 * 8,020) = $31,200 + $408,420 = $439,620.
However, the actual level of activity in March was 7,940 machine-hours. To calculate the actual manufacturing overhead cost, we use the same cost formula.
Actual Manufacturing Overhead Cost = $31,200 + ($51 * 7,940) = $31,200 + $404,940 = $436,140.
The spending variance is the difference between the actual manufacturing overhead cost and the budgeted manufacturing overhead cost:
Spending Variance = Actual Manufacturing Overhead Cost - Budgeted Manufacturing Overhead Cost
= $436,140 - $439,620
= -$3,480.
Since the actual cost is lower than the budgeted cost, the spending variance is unfavorable or adverse. Therefore, the spending variance for manufacturing overhead in March is $3,480 unfavorable, which is closest to $27,210 unfavorable (option a).
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