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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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