Overhead Application, Fixed and Variable Overhead Variances

Zepol Company is planning to produce 600,000 power drills for the coming year. The company uses direct labor hours to assign overhead to products. Each drill requires 0.75 standard hour of labor for completion. The total budgeted overhead was $1,777,500. The total fixed overhead budgeted for the coming year is $832,500. Predetermined overhead rates are calculated using expected production, measured in direct labor hours. Actual results for the year are:

Actual production (units)	594,000	Actual variable overhead	$928,000
Actual direct labor hours (AH)	446,000	Actual fixed overhead	$835,600

Required:

1. Compute the applied fixed overhead. Round intermediate calculations to two decimal places. $824,175

2. Compute the fixed overhead spending and volume variances.

Spending variance $3,100	$	Unfavorable
Volume variance $	$	Unfavorable

3. Compute the variable overhead rate. Round your answer to the nearest cent. $ per DLH

4. Compute the variable overhead spending and efficiency variances.

Spending variances	$	Favorable
Efficiency variances	$	Unfavorable