‘Total overhead, 3-variance analysis. Furniture Inc. specializes in the production of futons.

It uses standard costing and flexible budgets to account for the production of a new line of futons. For 2010, budgeted variable overhead at a level of 3,200 standard monthly direct labour-hours was $25,600; budgeted total overhead at 4,000 standard monthly direct labourhours was $79,040. The standard cost allocated to each output included a total overhead rate of 120% of standard direct labour costs. For October, Furniture Inc. incurred total overhead of $99,600 and direct labour costs of $80,976. The direct labour price variance was $3,856 unfavourable. The direct labour flexible-budget variance was $5,776 unfavourable. The standard labour price was $16 per hour. The production-volume variance was $5,600, 404 CHAPTER 8 : favourable.

REQUIRED 1. Compute the direct labour efficiency variance, and the spending and efficiency variances for overhead. Also, compute the denominator level.
2. Describe how individual variable overhead items are controlled from day to day. Also, describe how individual fixed overhead items are controlled.LO1