Question: Simon Enterprises applies variable overhead at a rate of $1.50 per direct labor hour and fixed overhead at a rate of $1.75 per direct labor

Simon Enterprises applies variable overhead at a rate of $1.50 per direct labor hour and fixed overhead at a rate of $1.75 per direct labor hour. The company budgets 2 direct labor hours for each of the 5,900 units that are scheduled for production. Last year, Simon incurred actual variable overhead totaling $18,750 and actual fixed overhead totaling $21,500 for the production of 6,000 units. In addition, 11,800 direct labor hours were actually incurred.

Required
A. Calculate the variable overhead efficiency variance.
B. Calculate the variable overhead spending variance.

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