Chilczuk SA of Gdansk, Poland, is a major producer of classic Polish sausage. The company uses a standard cost system to help in the control of costs. Overhead is applied to production based on labor-hours. According to the company's flexible budget, the following manufacturing overhead costs should be incurred at an activity level of 35,000 labor-hours (the denominator activity level): Variable overhead costs Fixed Overhead costs Total Overhead costs 87,500 210,000 297,500 Last year the following operating results were recorded: 30,000 hours 32,000 hours Activity Actual labor-hours worked Standard labor-hours allowed for output Cost Actual Variable overhead cost incurred Actual fixed overhead cost incurred 78,000 209,400 At the end of the year, the company's manufacturing overhead account contained the following data: Actual Manufacturing Overhead Applied Manufacturing Overhead Difference 287,500 272,000 15,500 (unfav.) Management would like to determine the cause of the 15,500 unfavorable overhead. Required 1. Compute the predetermined overhead rate. Break the rate down into variable and fixed cost elements. 2. Show how the 272,000 applied manufacturing overhead account was computed. 3. Decompose the 15,500 unfavorable overhead figure to find how much is coming from variances in a. Spending b. Efficiency C. Budget d. Volumen. 4. Explain the meaning of each variance that you computed in Requirement 3 above