Variable Overhead Variances Morgan Tax Company considers 6,000 direct labor hour

Question

Variable Overhead Variances Morgan Tax Company considers 6,000 direct labor hours or 300 tax returns its normal monthly capacity. Its standard variable overhead rate is $5 per direct labor hour. During the current month, $25,400 of variable overhead cost was incurred in working 5,600 direct labor hours to prepare 270 tax returns. Determine the following variances. and indicate whether each is favorable or unfavorable: Determine the following variances: Do not use negative signs with any of your answers. Next to each variance answer. select either "F" for Favorable or "U for Unfavorable. Variable Overhead Variances Actual cost 0 x Split cost Standard cost: a. Variable overhead spending2600 IF b. Variable overhead efficiency S 1,000 Check

Explanation / Answer

Actual cost $       25,400 Split cost $       28,000 (5600 x $5) Standard cost $       27,000 (6000 x 270/300 x $5)

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