Le Energy Enterprise produces hose for specialised industrial uses. The company has budgeted an output level of 14,000 units of Model LE-E1 hoses for January 202X. Budgeted overheads amount to £420,000 for variable manufacturing overhead.

The company’s policy is to allocate overheads based on direct labour hour basis. The standard specification of the product shows that each unit would require 60 labour hours at variable overhead cost of £0.50 per hour. 

At the end of January, the actual output was recorded at 15,000 units. Actual labour hours worked totalled 880,000. The costing system shows that variable manufacturing overheads incurred were £460,000.

Required:

Analyse the detailed overhead cost variances in so far as the information permits.

(a) Variable overhead expenditure variance

(b) Variable overhead efficiency variance