The Pottery Limited Uses a Standard Costing System for All

Multiple Choice

The Pottery Limited uses a standard costing system for all its products. The Pottery Limited produces decorative vases. The standard direct labour time to paint one decorative vase is 2 hours and the standard cost of labour is £16 per direct labour hour. Variable overheads are allocated to each vase at the rate of £4 per labour hour. Budgeted production is 1,000 decorative vases per month with budgeted labour hours of 2,000 per month. In April, The Pottery Limited produced 1,050 decorative vases and incurred total variable overheads of £8,300. The direct labour hours paid for April were 2,025. What is the variable overhead expenditure variance for April?

A) £100 Favourable
B) £200 Unfavourable
C) £300 Favourable
D) £1,200 Favourable