Exercise 10-58 Overhead Variances

At the beginning of the year, Lopez Company had the following standard cost sheet for one of its chemical products:

Direct materials (4 lbs. @ $2.80) $11.20

Direct labor (2 hrs. @ $18.00) 36.00

FOH (2 hrs. @ $5.20) 10.40

VOH (2 hrs. @ $0.70) 1.40

Standard cost per unit $59.00

Lopez computes its overhead rates using practical volume, which is 90,000 units. The actual results for the year are as follows: (a) Units produced: 88,000; (b) Direct labor: 170,000 hours at $18.10; (c) FOH: $930,000; and (d) VOH: $125,000

Required:

1. Compute the variable overhead spending and efficiency variances.

2. Compute the fixed overhead spending and volume variances