The Lubbock plant of Merri's Small Motor Division produces a major subassembly for a 6.0 horsepower motor for lawn mowers. The plant uses a standard costing system for production costing and control. The standard cost sheet for the subassembly follows: Standard overhead rates are computed based on practical activity measured in standard direct labor hours. Required: Compute the variable overhead spending and efficiency variances. 1. Variable overhead variances: The volume is a measure of unused capacity. This cost is reduced as production increases. Thus, selling more goods is the key to reducing this capacity (at least in the short run)