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Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses standard costing system and develops its overhead rates from the current annual budget. The budget is based on
Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 124,000 units requiring 496,000 direct labor hours. (Practical capacity is 516,000 hours.) Annual budgeted overhead costs total $798,560, of which $575,360 is fixed overhead. A total of 119,400 units using 494,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $261,700, and actual fixed overhead costs were $555,150. Required: 1. Compute the fixed overhead spending and volume variances. Fixed Overhead Spending Variance 20,210 Favorable Fixed Overhead Volume Variance 2,320 x Unfavorable 2. Compute the variable overhead spending and efficiency variances. Do not round intermediate calculations Variable Overhead Spending Variance 38,500 x Unfavorable Variable Overhead Efficiency Variance 900 Unfavorable
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