Alternate three-variance method of overhead variance analysis A manufacturing com- pany uses a standard costing system for its manufacturing operations. During the year the

company produced 3,000 units of output using 8,600 direct labor hours. Standards call for 3 direct labor hours per unit. Direct labor hours are used as the base for applying overhead to products. The overhead rate is based on a total overhead budget of $84,000 and expected production at the normal capacity level of 3,500 units of output. Budgeted fixed cost for the year was $31,500. Actual overhead cost for the year was $70,800.

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This problem requires reading the appendix material.