m 11.40 Overhead Variances cim Company produces microwave ovens Extrim's plant in Sault Ste. Marie uses a standard p costing system. The standard costing system relies on direct labour hours to assign overhead costs lo roduction. The direct labour standard indicates that four direct labour hours should be used for OBJECTIVE microwave unit produced. (The Sault Ste. Marie plant produces only one model.) The normal uction volume is 120,000 units. The budgeted overhead for the coming year is as follows: every Fixed overhead Variable overhead At normal volume $1,286,400 888,000 Extrim applies overhead on the basis of direct labour hours ng the year, Extrim produced 119,000 units, worked 487.900 direct labour hours, and incurred actual fixed overhead costs of $1.3 million and actual variable overhead costs of $927.010 Required: 1. Calculate the standard fixed overhead rate and the standard variable overhead rate 2. Compute the applied fixed overhead and the applied variable overhead. What is the total Check figures: I. Standard variable overhead rate $1.85 per direct labour hour fixed overhead variance? Total variable overhead variance? CONCEPTUAL CONNECTION Break down the total fixed overhead variance into a spend- ing variance and a volume variance. Discuss the significance of each CONCEPTUAL CONNECTION Compute the variable overhead spending and efficiency variances. Discuss the significance of each 3. Volume variance 3. = $10,720 U 4. Efficiency variance $22,015 U