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Top Eagle Company makes customized golf shirts for sale to golf courses. Each shirt requires 3 hours to produce because of the customized logo for
Top Eagle Company makes customized golf shirts for sale to golf courses. Each shirt requires 3 hours to produce because of the customized logo for each golf course. Top Eagle uses direct labor-hours to allocate the overhead cost to production. Fixed overhead costs. including rent, depreciation, supervisory salaries, and other production expenses, are budgeted at $24,000 per month. The facility currently used is large enough to produce 1,600 shirts per month. During March, Top Eagle produced 760 shirts and actual fixed costs were $12,400 Read the requirements. Requirements 1 \& 2. Calculate the fixed overhead spending variance and indicate whether it is favorable (F) or unfavorable (U). If Top Eagle uses direct labor-hours available at capacity to calculate the budgeted fixed overhead rate, what is the production-volume variance? Indicate whether it is favorable (F) or unfavorable (U). Begin by determining the formula then computing the fixed overhead rate per direct labor hour. (Round the fixed overhead rate to the nearest cent.)
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