(Appendix) Calculating factory overhead: four variances LO₆ Gearloose Gasket Company budgets 8,000 direct labor hours for the year.

" The total overhead budget is expected to amount to $20,000. The standard cost for a unit of the company's product estimates the variable overhead as follows:

Variable factory overhead (3 hours @ $2 per direct labor hour) $6 per unit The actual data for the period follow:

Using the four-variance method, calculate the overhead variances. (Hint: First compute the budgeted fixed overhead rate.)

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Actual completed units Actual direct labor hours. Actual variable overhead. Actual fixed overhead 2,500 7,640 $16,100 3,920