Shawl Corporation's Variable Overhead Is Applied on the Basis of Direct

question 93

Essay

Shawl Corporation's variable overhead is applied on the basis of direct labor-hours. The standard cost card for product F02E specifies 5.5 direct labor-hours per unit of F02E. The standard variable overhead rate is $6.80 per direct labor-hour. During the most recent month, 1,560 units of product F02E were made and 8,700 direct labor-hours were worked.
The actual variable overhead incurred was $52,635.
Required:
a. What was the variable overhead rate variance for the month?
b. What was the variable overhead efficiency variance for the month?

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Definitions:

Operating Profit

Earnings before interest and taxes (EBIT), calculated by subtracting operating expenses from gross profit.

Segment Revenues

Segment revenues refer to the income generated from a specific division or business unit within a larger corporation.

Interest Revenue

Interest revenue is the earnings a company generates from deposit accounts or from lending funds to other entities.

Auditor Opinions

Professional judgements issued by auditors at the conclusion of an audit, reflecting their assessment of the accuracy and fairness of a company's financial statements.