Answer Happy

Overhead Variances, Two- And Three-Variance Analyses 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 121,000 units requiring 484,000 direct labor hours. (Practical capacity is 504,000 hours.) Annual budgeted overhead costs total $750,200, of which $546,920 is fixed overhead. A total of 119,200 units using 482,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $240,400, and actual fixed overhead costs were $555,600. Required: 1. Compute overhead variances using a two-variance analysis. Budget Variance 802 X Unfavorable Volume Variance $ 2,784 X Unfavorable 2. Compute overhead variances using a three-variance analysis. Spending Variance $ Unfavorable Efficiency Variance Unfavorable Volume Variance Unfavorable