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LO.2 (OH variances) Edina Co. manufactures a product that requires 3.5 machine hours per unit. The variable and fixed overhead rates were computed using expected
LO.2 (OH variances) Edina Co. manufactures
a product that requires 3.5 machine hours per
unit. The variable and fixed overhead rates
were computed using expected capacity of
172800 units (produced evenly throughout
the year) and expected variable and fixed
overhead costs, respectively, of $2,419,200
and $4233,600. In October, Edina
manufactured 14,280 units using 50,160
machine hours. October variable overhead
costs were $198,000; fixed overhead costs
were $353,400.
a. What are the standard variable
and fixed overhead rates?
b. Compute the variable overhead
variances.
c. Compute the fixed overhead
variances.
d. Explain the volume variance
computed in part (c).
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