9

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

Direct material (30 Ibs. @ $2.60 per Ib.) $ 78.00 Direct labor (20 hrs. @ $4.70 per hr.) 94.00 Variable overhead (20 hrs. @ $2.60 per hr.) 52.00 Fixed overhead (20 hrs. @ $1.20 per hr.) 24.00 Total standard cost $ 248.00

The $3.80 ($2.60 + $1.20) total overhead rate per direct labor hour is based on an expected operating level equal to 60% of the factory's capacity of 61,000 units per month. The following monthly flexible budget information is also available.

Operating Levels (% of capacity) Flexible Budget 55% 60% 65% Budgeted output (units) 33,550 36,600 39,650 Budgeted labor (standard hours) 671,000 732,000 793,000 Budgeted overhead (dollars) Variable overhead $ 1,744,600 $ 1,903,200 $ 2,061,800 Fixed overhead 878,400 878,400 878,400 Total overhead $ 2,623,000 $ 2,781,600 $ 2,940,200

During the current month, the company operated at 55% of capacity, employees worked 652,000 hours, and the following actual overhead costs were incurred.

Variable overhead costs $ 1,714,000 Fixed overhead costs 918,000 Total overhead costs $ 2,632,000

AH = Actual Hours

SH = Standard Hours

AVR = Actual Variable Rate

SVR = Standard Variable Rate

1. Compute thevariable overhead spending and efficiency variances.

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

3. Compute the controllable variance.

Required 2 Required 1 Compute the fixed overhead spending and volume variances and classify each as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round \"Rate per unit\" to 2 decimal places.) Required 1 H Required 2 Required 3 Compute the controllable variance. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.) Controllable variance