Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead...
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Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 129,000 units requiring 516,000 direct labor hours. (Practical capacity is 536,000 hours.) Annual budgeted overhead costs total $851,400, of which $608,880 is fixed overhead. A total of 119,300 units using 514,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $260,400, and actual fixed overhead costs were $556,150, Required: 1. Compute the fixed overhead spending and volume variances. Fixed Overhead Spending Variance 52,730 Favorable Unfavorable Fixed Overhead Volume Variance -7,552 X 2. Compute the variable overhead spending and efficiency variances. Do not round intermediate calculations Unfavorable Variable Overhead Spending Variance 43,500 X Unfavorable Variable Overhead Efficiency Variance -18,620 X
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