Jake's Cheese Company Produces Gourmet Cheese for Resale at Local

Essay

Jake's cheese Company produces gourmet cheese for resale at local grocery stores.Jake's expected to use 0.50 direct labor hours to produce one unit (batch)of product,and the variable overhead rate is $5.00 per hour.Actual results are in for last year,which indicates 45,000 batches of cheese were produced and sold.The company's direct labor workforce worked 27,500 hours,and variable overhead costs totaled $144,000.
(1)Calculate the variable overhead spending variance.
(2)Calculate the variable overhead efficiency variance.
(3)Suggest several possible reasons for the variable overhead spending and efficiency variances.