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Simon Enterprises applies variable overhead at a rate of $1.50 per direct labor hour and fixed overhead at a rate of $1.75 per direct labor hour. The company budgets two direct labor hours for each of the 5,900 units that are scheduled for production. Last year, Simon incurred actual variable overhead totaling $18,750, and actual fixed overhead totaling $21,500, for the production of 6,000 units. In addition, 11,800 direct labor hours were actually incurred.
A. Calculate the fixed overhead volume variance.
B. Calculate the fixed overhead spending variance. Favorable/unfavorabl
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