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Variable Overhead Variances Smith Tax Company considers 6,000 direct labor hours or 300 tax returns its normal monthly capacity. Its standard variable overhead rate is
Variable Overhead Variances Smith Tax Company considers 6,000 direct labor hours or 300 tax
returns its normal monthly capacity. Its standard variable overhead rate is $50 per direct labor hour.
During the current month, $250,400 of variable overhead cost was incurred in working 5,500 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
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