=+12-27 KK Overhead variances, missing information OBJECTIVES 3, 4, 5 Harrison Ltd budgets 18000 machine-hours for the production of calculator chips in August. The budgeted variable overhead rate is $6 per machine-hour. At the end of August, there is a $375 favourable spending variance for variable overhead and a $1575 unfavourable spending variance for fixed overhead. For the calculator chips produced, 14850 machine-hours are budgeted and 15000 machine-hours are actually used. Total actual overhead costs are $120000.

Required 1 Calculate efficiency and flexible-budget variances for Harrison Ltd’s variable overhead in August. Will variable overhead be over- or underallocated? By how much?

2 Calculate production-volume and flexible-budget variances for Harrison Ltd’s fixed overhead in August. Will fixed overhead be over- or underallocated? By how much?