Problem
Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows:
The planning budget for March was based on producing and selling 25,000 units. However, during March the company actually produced and sold 30,000 units and incurred the following costs:
a)Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production
b)Direct laborers worked 55,000 hours at a rate of $15.00 per hour
c)Total variable manufacturing overhead for the month was $280,500
1) What is the labor efficiency variance for March?
2) What is the labor spending variance for March?