Problem:
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 lbs. @ $ 6.80/lb.
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 hrs. @ $14.00/hr.
Variable overhead (based on machine hours) . . . . . . . . . . 1.5 hrs. @ $ 4.50/hr.
The following activity took place:
2,910 machine hours were worked.
11,400 lbs. of raw material were purchased for inventory at a total cost of $80,940.
1,900 cases of finished product were produced.
9,260 lbs. of raw material were used.
4,420 labor hours were worked at an average rate of $14.35 per hour.
$12,513 actual variable overhead costs were incurred.
Required to do:
Calculate the following variances and provide plausible explain results
Variable overhead spending variance.
Variable overhead efficiency variance.