E11.25 Overhead variances: manufacturer LO 11.5 Zapp Lid is a manufacturer of electrical switches, and uses a standard costing system. The standard manufacturing overhead costs per switch are based on direct labour hours and are as follows: Variable overhead (5 hours @ $36 per hour) $180 Fixed overhead (5 hours @ $54 per hour)* 270 Total overhead $450 * Based on capacity of 300 000 direct labour hours per month. The following information is available for October: . 56 000 switches were produced, although 60 000 switches were budgeted. . 275 000 direct labour hours were worked at a total cost of $11 475 000. . Variable overhead costs were $10 530 000. . Fixed overhead costs were $16 875 000. Required: Calculate the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances for October. Indicate whether each variance is favourable or unfavourable