Orion Inc. uses a standard costing system. Overhead costs are applied based on direct labour hours.

Budgeted data for January are as follows:

Static Budget

Units Produced

126,000

Direct Labour Hours

56,700

Total Budgeted ManufacturingOverhead Costs

$130,410

Predetermined Fixed Manufacturing Overhead Rate $2.00 per DLH

Actual data for January are as follows:

Actual

Units Produced

115,000

Direct Labour Hours

55,000

Variable Overhead Costs

$15,250

Fixed Overhead Costs

$115,200

Required: (show all calculations below for full marks)Answer

1. What is the rate variance for variable overhead. __________

2. What is the efficiency variance for variable overhead?_________

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QUESTION B: (Continued)

Answer

3. What is the Rate variance for fixed overhead?_____________

4. What is the Production volume variance for

fixed overhead?_____________

5.Using your answers to questions 3 and 4 above:

a.explain the rate and production volume variances (descriptive analytics)

b.explain why these variances may have occurred (diagnostic analytics)