(Overhead Variances) Abby”s Fine Meats manufactures packaged meats that are sold in grocery stores. The company uses a standard costing system and applies variable manufacturing overhead to each product based on the kilograms of raw meat used in production. The standard variable overhead rate for the company is $0.35 per kg of raw meat. Each product uses an average of 0.50 kg of raw meat. For the year ended December 31, 2012, the actual variable overhead was $258,000. During 2012, a total of 860,000 kg of raw meat was used in the production of 1,800,000 packages of processed meat.
- Determine the variable overhead variances for 2012.
- What are the potential causes of these variances?