17.18.

Sedona Company set the following standard costs for one unit of its product for 2017.

Direct material (30 Ibs. @ $2.00 per Ib.)		$	60.00
Direct labor (20 hrs. @ $4.50 per hr.)			90.00
Factory variable overhead (20 hrs. @ $2.50 per hr.)			50.00
Factory fixed overhead (20 hrs. @ $1.20 per hr.)			24.00
Standard cost		$	224.00

The $3.70 ($2.50 + $1.20) total overhead rate per direct labor hour is based on an expected operating level equal to 70% of the factory's capacity of 55,000 units per month. The following monthly flexible budget information is also available.

		Operating Levels (% of capacity)
Flexible Budget			65%				70%				75%
Budgeted output (units)			35,750				38,500				41,250
Budgeted labor (standard hours)			715,000				770,000				825,000
Budgeted overhead (dollars)
Variable overhead		$	1,787,500			$	1,925,000			$	2,062,500
Fixed overhead			924,000				924,000				924,000
Total overhead		$	2,711,500			$	2,849,000			$	2,986,500

During the current month, the company operated at 65% of capacity, employees worked 678,000 hours, and the following actual overhead costs were incurred.

Variable overhead costs		$	1,715,000
Fixed overhead costs			999,200
Total overhead costs		$	2,714,200

AH = Actual Hours SH = Standard Hours AVR = Actual Variable Rate SVR = Standard Variable Rate SFR = Standard Fixed Rate

(1) Compute the predetermined overhead application rate per hour for variable overhead, fixed overhead, and total overhead at 70% of capacity.
	Predetermined OH Rate
Variable overhead costs
Fixed overhead costs
Total overhead costs
(2) Compute the total variable and total fixed overhead variances and classify each as favorable or unfavorable.
			--------At 65% of Operating Capacity--------
		Standard DL Hours	Overhead Costs Applied	Actual Results	Variance	Fav./Unf.
Variable overhead costs
Fixed overhead costs
Total overhead costs

18.1 1. Compute the variable overhead spending and efficiency variances.

Actual Variable OH Cost			-1	Flexible Budget			-1	Standard Cost (VOH applied)
		0
				2
-1
				$0
				0

18.2 Compute the fixed overhead spending and volume variances and classify each as favorable or unfavorable

Actual Fixed OH cost			1	Fixed OH (Fixed Budgeted)			-1	Standard Cost (FOH applied)
				0
-1
				$0
				0

18.3 Compute the controllable variance

Controllable Variance
Controllable variance