Required. Calculate the variable overhead spending variance and the variable overhead efficiency variance. Valley Company uses a

Required. Calculate the variable overhead spending variance and the variable overhead efficiency variance.

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Valley Company uses a standard cost system to control production costs. For 2018, the following data is available: Actual Standard/Budget Production Direct materials Quantity Cost 22,000 units 100,000 kg $185,000 5 kg per unit of output (production) $1.60/kg Direct labor 10,500 hours $160,000 $205,000 (30% fixed) 1 hour per unit of output (production) $12/hour Hours Cost Overhead cost $200,000 (40% fixed) Variable overhead is applied on the basis of direct labor-hours. The application rate is $6 per direct labor-hour. Valley Company uses a standard cost system to control production costs. For 2018, the following data is available: Actual Standard/Budget Production Direct materials Quantity Cost 22,000 units 100,000 kg $185,000 5 kg per unit of output (production) $1.60/kg Direct labor 10,500 hours $160,000 $205,000 (30% fixed) 1 hour per unit of output (production) $12/hour Hours Cost Overhead cost $200,000 (40% fixed) Variable overhead is applied on the basis of direct labor-hours. The application rate is $6 per direct labor-hour.

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