E10.10 (LO 5), AP It was the end of the first quarter, and Xena was evaluating the companys manufacturing overhead cost situation. She recalled the heated discussions during the budget meetings at the end of the prior year as managers thoroughly considered their options. The resulting annual budgeted variable-MOH cost of $37,700 and budgeted fixed-MOH cost of $52,200 support a planned volume of 5,800 units. Standards were also set at that time for the cost driver, machine hours, where each unit should use 1.25 machine hours. At the end of this first quarter, the company had used 1,930 machine hours in its production of 1,500 units. Actual variable-MOH costs incurred thus far were $9,350, and total fixed-MOH costs thus far totaled $12,500.

Required

1.Calculate the budgeted variable-MOH rate per machine hour and standard variable-MOH cost per unit. Do the same for fixed-MOH.

2. Determine the variable-MOH price and efficiency variances as of the end of the first quarter. What could be two plausible explanations for each variance?

3. Determine the fixed-MOH price and volume variances for this first quarter. What could be two plausible explanations for each of these variances?

4. How will the variance analysis from this first quarter affect the companys decisions and analyses going forward, if it will at all?