Exercise 11-32 Overhead Variances (LO 11-5)

Montoursville Control Company, which manufactures electrical switches, uses a standard-costing system. The standard production overhead costs per switch are based on direct-labor hours and are as follows:

Variable overhead (5 direct-labor hours @ $12.00 per hour)	$	60
Fixed overhead (5 direct-labor hours @ $18.00 per hour)*		90
Total overhead	$	150

*Based on capacity of 303,000 direct-labor hours per month.

The following information is available for the month of October.

Variable overhead costs were $4,260,000.

Fixed overhead costs were $6,525,000.

57,600 switches were produced, although 60,600 switches were scheduled to be produced.

281,000 direct-labor hours were worked at a total cost of $4,425,000.

Required:

Compute the variable-overhead spending and efficiency variances and the fixed-overhead budget and volume variances for October. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).)

Variable-overhead spending variance Variable-overhead efficiency variance Fixed-overhead budget variance Fixed-overhead volume variance nfavorable Favorable nfavorable nfavorable