Overhead Application, Fixed and Variable Overhead Variances Wiarton Wood Products Ltd. is planning to produce 150,000 metal widgets for the coming year. Each unit requires 2 standard hours of direct labour for completion at a standard direct labour rate of $14.00 per hour, and a standard of 2.25 grams of direct material at a standard cost of $5 per gram. The company uses direct labour hours to assign overhead to products. The total overhead budgeted for the coming year is $1,200,000, and the standard fixed overhead rate is $3.50 per unit produced. Actual results for the year were: Production (units) 142,000 Actual direct labour hours 270,000 15,000 16,400 Beginning direct materials inventory (units) Ending direct materials inventory (units) Direct materials purchases (units) Cost of direct materials purchases 600,000 $2,900,000 $4,100,000 Direct labour cost $ 621,000 Actual variable overhead Actual fixed overhead $ 490,000 Required: 1. Compute the variable overhead spending and efficiency variances. Label as favourable or unfavourable. Unfavourable Spending variance Efficiency variance 2. Compute the fixed overhead spending and volume variances. Label as favourable or unfavourable. Spending variances Volume variances $