The following data are for last month’s production:

• Number of suits completed (as before) 5,000 units
• Actual direct labor hours (as before) 10,500 hours
• Variable overhead costs incurred $40,950

Using these data and the data from the standard cost card, the variable overhead variances are:

• 5,000 suits ´ 2.0 hours per suit = 10,000 hours.

F = Favorable

U = Unfavorable

The variable manufacturing overhead variances can also be computed as follows:

OVERHEAD SPENDING VARIANCE:

VOSV = AH (AR — SR)

= 10,500 hrs. ($3.90 per hr.* — $4.00 per hr.) = $1,050 F

• $40,950 ÷ 10,500 hrs. = $3.90 per hr.

OVERHEAD EFFICIENCY VARIANCE:

VOEV = SR (AH — SH)

= $4.00 per hr. (10,500 hrs. — 10,000 hrs.) = $2,000 U