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Divot Down Company makes customized golf shirts for sale to golf courses. Each shirt requires 2.5 hours to produce because of the customized logo for each golf course. Divot Down 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 $15,000 per month. The facility currently used is large enough to produce 1,500 shirts per month. During March, Divot Down produced 650 shirts and actual fixed costs were $12,200. Read the requirements Requirements 1 & 2. Calculate the fixed overhead spending variance and indicate whether it is favorable (F) or unfavorable (U). If Divot Down 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.) Fixed overhead rate Choose from any list or enter any number in the input fields and then click Check Answer. 10 parts Clear All Check Answer remaining X i Requirements 1. Calculate the fixed overhead spending variance and indicate whether it is favorable (F) or unfavorable (U). 2. If Divot Down 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). 3. An unfavorable production-volume variance could be interpreted as the economic cost of unused capacity. Why would Divot Down be willing to incur this cost? 4. Divot Down's budgeted variable cost per unit is $28, and it expects to sell its shirts for $55 apiece. Compute the sales-volume variance and reconcile it with the production-volume variance calculated in requirement 2. What does each concept measure? Print Done