ABC Limited Uses a Standard Costing System for All Its

Multiple Choice

ABC Limited uses a standard costing system for all its products. ABC Limited produces shirts. Each shirt uses a standard 8 hours of direct labour. Variable overhead is incurred at the rate of £0.75 per labour hour. Budgeted production is 5,000 shirts per annum. During the financial year ended 30 April 2019, ABC produced 5,500 shirts. A total of 45,000 direct labour hours were worked and the total variable overhead expenditure was £31,500. Based on the above information, what is the variable overhead total variance for the year ended 30 April 2019?

A) £750 Unfavourable
B) £1,500 Unfavourable
C) £1,500 Favourable
D) £2,250 Favourable