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Overhead Variances, Four-Variance Analysis

Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 124,000 units requiring 496,000 direct labor hours. (Practical capacity is 516,000 hours.) Annual budgeted overhead costs total $803,520, of which $575,360 is fixed overhead. A total of 119,400 units using 494,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $261,000, and actual fixed overhead costs were $556,150.

Required:

1. Compute the fixed overhead spending and volume variances.

Fixed Overhead Spending Variance	$_____	Favorable/Unfavorable
Fixed Overhead Volume Variance	$_____	Favorable/Unfavorable

2. Compute the variable overhead spending and efficiency variances. Do not round intermediate calculations

Variable Overhead Spending Variance	$_____	Favorable/Unfavorable
Variable Overhead Efficiency Variance	$_____	Favorable/Unfavorable