OVERHEAD VARIANCES At the beginning of the year, Raydom Company had the following standard cost sheet for one of its chemical products:

Direct materials (5 lbs. @ $6.40) $32.00 Direct labor (2 hrs. @ $18.00) 36.00 Fixed overhead (2 hrs. @ $4.00) 8.00 Variable overhead (2 hrs. @ $1.50) 3.00 Standard cost per unit $79.00 Raydom computes its overhead rates using practical volume, which is 144,000 units.

The actual results for the year are as follows:

a. Units produced: 140,000

b. Direct labor: 290,000 hours at $9.05

c. Fixed overhead: $1,160,000

d. Variable overhead: $436,000 Required:

. Compute the variable overhead spending and volume variances.

. Compute the fixed overhead spending and efficiency variances.

Exercise