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Top Eagle Company makes customized golf shirts for sale to golf courses. Each shirt requires 1.5 hours to produce because of the customized logo for each golf course. Top Eagle 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 $15,300 per month. The facility currently used is large enough to produce 1,700 shirts per month. During March, Top Eagle produced 620 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 Top Eagle 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 Requirements . 1. Calculate the fixed overhead spending variance and indicate whether it is favorable (F) or unfavorable (U). 2. If Top Eagle 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 Top Eagle be willing to incur this cost? 4. Kinetic's budgeted variable cost per unit is $26, 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

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