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Calgary Paper Company produces paper for photocopiers. The company has developed standard overhead rates based on a monthly capacity of 90,000 direct-labor hours as follows:

Calgary Paper Company produces paper for photocopiers. The company has developed standard overhead rates based on a monthly capacity of 90,000 direct-labor hours as follows:

Standard costs per unit (one box of paper):

Variable overhead (2 direct-labor hours @ $4)........................$8

Fixed overhead (4 direct-labor hours @ $12)..............................$48

Total...................................................................................$56

During April, 25,000 units were scheduled for production: however, only 20,000 units were actually produced. The following data relate to April.

  1. Actual direct-labor cost incurred was $1,782,000 for 99,000 actual hours of work.
  2. Actual overhead incurred totaled $1,435,200, of which $475,200 was variable and $960,000 was fixed.

Required:

What is the:

  1. Variable-overhead spending variance.
  2. Variable-overhead efficiency variance.
  3. Fixed-overhead budget variance.
  4. Fixed-overhead volume variance.

State whether each variance is favorable or unfavorable, where appropriate

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