E10-3A. 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:

a. Variable overhead spending

b. Variable overhead efficiency