Nelson Co$.$ manufactures a product that requires $3\mathrm{.}5$ machine hours per unit. The variable and fixed overhead rates were computed using expected capacity of $144,000$ units $($produced evenly throughout the year$)$ and expected variable and fixed overhead costs, respectively, of $$2,016,000$ and $$3,528,000.$ In October, Nelson manufactured $11,900$ units using $41,800$ machine hours. October variable overhead costs were $$165,000$; fixed overhead costs were $$294,500.$

a$.$ What are the standard variable and fixed overhead rates?

Standard VOH rate Answer

$4$

per MH

Standard FOH rate Answer

$7$

per MH

b$.$ Compute the variable overhead variances.

Note: Do not use a negative sign with your answer.

VOH spending variance Answer

$2,090$

Answer

Favorable

VOH efficiency variance Answer

$600$

Answer

Unfavorable

Total VOH variance Answer

$1,490$

Answer

Favorable

c$.$ Compute the fixed overhead variances.

Note: Do not use a negative sign with your answer.

FOH spending variance Answer

$2,090$

Answer

Unfavorable

FOH volume variance Answer

$1,050$

Answer

Unfavorable

Total FOH variance Answer

$3,140$

Answer

Unfavorable