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Shawl Corporation's variable manufacturing 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 manufacturing 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 manufacturing overhead incurred was $52,635
Required:
a. What was the variable overhead spending variance for the month?
b. What was the variable overhead efficiency variance for the month?
Describe why overhead cost shifted from the high-volume product to the low-volume product under activity-based costing.
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