OH variances The manager of the Texas Department of Transportation has determined that it typically takes 30 minutes for the department's employees to register a new car. In Bexar County, the predetermined fixed overhead rate was computed on an estimated 10,000 direct labor hours per month and is $9 per direct labor hour, whereas the predetermined variable overhead rate is $3 per direct labor hour. During July, 18,800 cars were registered in Bexar County, and 9,500 direct labor hours were worked in registering those vehicles. For the month, variable overhead was $27,700 and fixed overhead was $90,800. Note: In answering the following questions, do not use negative signs with your answers. a. Compute overhead variances using a four-variance approach. VOH Spending Variance Actual VOH Budgeted VOH = VOH Spending Variance $ 27,700 - $ 28,500 = $ 800F VOH Efficiency Variance Budgeted VOH Applied VOH = VOH Efficiency Variance $ 28,500 $ 28,200 $ 300 U FOH Spending Variance Actual FOH Budgeted FOH = FOH Spending Variance $ 90,800 $ 90,000 800 U FOH Volume Variance Budgeted FOH Applied FOH FOH Volume Variance $ 90,000 - $ 84,600 = $ 5,400 V b. Compute overhead variances using a three-variance approach. OH Spending Variance Actual OH Budget at Actual = OH Spending Variance $ 118,500 -$ 118,500 = $ 0 Neither For U OH Efficiency Variance Budget at Actual Budget at Standard = OH Efficiency Variance $ 118,500 $ 114,000 x $ 1 * U Volume Variance Budget at Standard Applied OH Volume Variance $ 1 x - $ 11 X = $ 10 X U c. Compute overhead variances using a two-variance approach. Budget Variance Actual OH Budgeted OH = Budget Variance $ 118,500 $ 120,000 x = $ 1,500 x U Volume Variance Budgeted OH Applied OH Volume Variance $ 120,000 X - $ 1 x = $ 1 x U Check