(Calculation of four variances) Murlarkey’s Ceramics has an expected monthly capacity of 3,000 units but only 1,900 units were produced and 2,000 direct labor hours were used during October 2006 due to a fire on the production floor. Actual variable overhead for October was $16,000 and actual fixed overhead was $44,000.

Standard cost data follow:

a. Compute and compare the actual overhead cost per unit with the ex¬ pected overhead cost per unit.

b. Calculate overhead variances using the four-variance method.LO.1

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Direct material Direct labor Variable overhead Fixed overhead Total Standard Cost per Unit (One Unit Takes One Labor Hour) $ 9.00 15.00 8.00 16.00 $48.00