Landor Company uses a standard cost system and sets predetermined overhead rates based on direct labor-hours. The following data are taken from the company's budget for the current year: Denominator activity (direct labor-hours) Variable manufacturing overhead cost Fixed manufacturing overhead cost .... 5,000 $25,000 $59,000 The standard cost card for the company's only product is given below: Direct materials, 3 yards at $4.40 per yard ... Direct labor, 1 hour at $12 per hour ... Manufacturing overhead, 140% of direct labor cost. Standard cost per unit... $13.20 12.00 16.80 $42.00 During the year, the company produced 6,000 units of product and incurred the following costs: Materials purchased, 24,000 yards at $4.80 per yard ..... $115,200 Materials used in production (in yards) ...... 18,500 Direct labor cost incurred, 5,800 hours at $13 per hour $75,400 Variable manufacturing overhead cost incurred $29,580 Fixed manufacturing overhead cost incurred .. $60,400 1. The following standards for variable overhead have been established for a company that makes only one product: Standard hours per unit of output... Standard variable overhead rate... 6.9 hours $15.80 per hour The following data pertain to operations for the last month: Actual hours Actual total variable overhead cost.. Actual output... 6.100 hours $97,600 800 units Required: Based upon the data above are the overhead variances favorable or unfavorable? 2. What is the spending variance and how might it be used by management? (4pts) 3. During a recent lengthy strike at Morell Manufacturing Company, management replaced striking assembly line workers with office workers. The assembly line workers had been paid $18 per hour while the office workers are only paid $10 per hour. What is the most likely effect on the labor variances in the first month of this strike? (4 pts)