Problem:
Walker Corporation is a distributor of several products. They use a predetermined variable overhead rate based on direct labor hours. In the most recent month, 90,000 items were shipped to customers using 3,500 direct labor hours. The company incurred a total of $12,600 in variable overhead costs. According to the company's standards, 0.04 direct labor hours are required to fulfill an order for one item and the variable overhead rate is $3.50 per direct labor hour.
1) What is the variable overhead spending variance? Show computations.
2) What is the variable overhead efficiency variance? Show computations.
Please show all work and supply the answer in Word doc, not Excel. I need to learn how to do this for my business.