Variable Overhead Variances. Brier Company produces car covers. (This is the same company as the previous exercises. This exercise can be assigned independently.) The company applies variable manufacturing overhead at a standard rate of $2 per direct labor hour. The standard quantity of direct labor is 3 hours per unit. Variable overhead costs totaled $32,000 for the month of September. A total of 14,700 direct labor hours were worked during September to produce 5,100 car covers. Required: Calculate the variable overhead spending variance and variable overhead efficiency variance using the format shown in Figure 10.8. Clearly label each variance as favorable or unfavorable.

31. Variable Overhead Variances As shown below, the variable overhead spending variance is . As shown below, the variable overhead efficiency variance is . Standard Variable Actual Hours Overhead Costs Actual Variable at Standard Rate (Flexible Budget) Overhead Costs AH SR0 = SH SR0 hours per hour hours per hour = = = variable overhead variable overhead spending variance efficiency variance