Overhead Variances, Four-Variance Analysis

Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 120,000 units requiring 480,000 direct labor hours. (Practical capacity is 500,000 hours.) Annual budgeted overhead costs total $777,600, of which $561,600 is fixed overhead. A total of 119,000 units using 478,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $260,300, and actual fixed overhead costs were $555,050.

Required:

1. Compute the fixed overhead spending and volume variances.

Fixed Overhead Spending Variance	$fill in the blank 1	Favorable
Fixed Overhead Volume Variance	$fill in the blank 3	Unfavorable

2. Compute the variable overhead spending and efficiency variances. Do not round intermediate calculations

Variable Overhead Spending Variance	$fill in the blank 5	Unfavorable
Variable Overhead Efficiency Variance	$fill in the blank 7	Unfavorable

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