Montoursville Control Company, which manufactures electrical switches, uses a standard-costing system. The standard production overhead costs per switch are based on direct-labor hours and are as follows:

The following information is available for the month of October.
• Variable-overhead costs were $2,340,000.
• Fixed-overhead costs were $3,750,000.
• 56,000 switches were produced, although 60,000 switches were scheduled to be produced.
• 275,000 direct-labor hours were worked at a total cost of $2,550,000.

Required:
Compute the variable-overhead spending and efficiency variances and the fixed-overhead budget and volume variances for October. Indicate whether a variance is favorable or unfavorable where appropriate.

Transcribed Image Text:

Variable overhead (5 direct-labor hours @ $8.00 per hour). Fixed overhead (5 direct-labor hours @ $12.00 per hour)* Total overhead *Based on capacity of 300,000 direct-labor hours per month. $ 40 60 $100