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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
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 @ $13.00 per hour) Fixed overhead (5 direct-labor hours @ $21.00 per hour)* Total overhead $ 65 105 $170 *Based on capacity of 304,500 direct-labor hours per month. The following information is available for the month of October. Variable overhead costs were $4,620,000. Fixed overhead costs were $6,975,000. 57,900 switches were produced, although 60,900 switches were scheduled to be produced. 284,000 direct-labor hours were worked at a total cost of $4,725,000. 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 "O" for no effect (i.e., zero variance).) Answer is complete but not entirely correct. Unfavorable Variable-overhead spending variance Variable-overhead efficiency variance 928,000 $ 71,500 Favorable Fixed-overhead budget variance 580,500 Unfavorable Fixed-overhead volume variance 430.500 X Unfavorable
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