Nina Garcia is the newly appointed president of Aerospace Products Division (APD), which manufactures solar arrays for satellites. Garcia is concerned about manufacturing overhead costs at APD. APD allocates variable and fixed overhead costs to solar arrays on the basis of laser-cutting-hours. The budget information for May 2020 is as follows:

Actual results for May 2020 are as follows:

Required:

1. Compute the spending variance and the efficiency variance for variable overhead.
2. Compute the spending variance and the production-volume variance for fixed overhead.
3. Give two explanations for each of the variances calculated in requirements 1 and 2.

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Budgeted variable overhead rate Budgeted fixed overhead rate Budgeted laser-cutting time per solar array Budgeted production and sales for May 2020 Budgeted fixed overhead costs for May 2020 $200 per hour $240 per hour 1.5 hours 5,000 solar arrays $1,800,000