(Overhead variances) Wannstedt Corp. has a fully automated bicycle produc¬ tion facility in which almost 97 percent of conversion costs are driven by machine hours. Gregg Williams, the company’s cost accountant, has com¬ puted the following overhead variances for January:

Williams has gone on vacation, so the company president asks you to show her how the variances were computed and to answer several other ques¬ tions. You know that budgeted fixed overhead is $500,000; the predeter¬ mined variable and fixed overhead rates are $10 and $20 per machine hour, respectively, and budgeted capacity is 10,000 units.

a. Using the four-variance approach, prepare the analysis in diagram format similar to that on page 282 with as much detail as possible.

b. What is the standard number of machine hours allowed for each unit of output?

C. What is the number of actual hours worked?

d. What is the total spending variance?

e. What additional information about the manufacturing overhead variances is gained by inserting detailed computations into the variable and fixed manufacturing overhead variance analysis?

f. How would the overhead variances be closed if the three-variance ap¬ proach were used?LO.1

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Variable overhead spending variance Variable overhead efficiency variance Fixed overhead spending variance Fixed overhead volume variance $37,000 F 20,060 F 14,000 U 17,000 U