Variable Overhead Variances. Hal’s Heating produces furnaces for commercial buildings. (This is the same company as the previous exercises. This exercise can be assigned independently.) The company applies variable manufacturing overhead at a standard rate of $15 per direct labor hour. The standard quantity of direct labor is 35 hours per unit. Variable overhead costs totaled $190,000 for the month of January. A total of 10,000 direct labor hours were worked during January to produce 320 furnaces. Required: Calculate the variable overhead spending variance and variable overhead efficiency variance using the format shown in Figure 4.8 “Variable Manufacturing Overhead Variance Analysis for Jerry’s Ice Cream”. Clearly label each variance as favorable or unfavorable.

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Chapter1: Financial Statements And Business Decisions
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Variable Overhead Variances. Hal’s Heating produces furnaces for commercial buildings. (This is the same company as the previous exercises. This exercise can be assigned independently.) The company applies variable manufacturing overhead at a standard rate of $15 per direct labor hour. The standard quantity of direct labor is 35 hours per unit. Variable overhead costs totaled $190,000 for the month of January. A total of 10,000 direct labor hours were worked during January to produce 320 furnaces.

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Calculate the variable overhead spending variance and variable overhead efficiency variance using the format shown in Figure 4.8 “Variable Manufacturing Overhead Variance Analysis for Jerry’s Ice Cream”. Clearly label each variance as favorable or unfavorable.

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