Overhead Variances, Four-Varlance 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 121,000 units requiring 484,000 direct labor hours. (Practical capacity is 504,000 hours.) Annual budgeted overhead costs total $788,920, of which $566,280 is fixed overhead. A total of 119,500 units using 482,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $261,500, and actual fixed overhead costs were $555,750. Required: 1. Compute the fixed overhead spending and volume variances. Fixed Overhead Spending Varlance 10,530 Favorable Fixed Overhead Volume Variance 2. Compute the variable overhead spending and efficiency variances. Do not round Intermediate calculations Variable Overhead Spending Variance Variable Overhead Efficiency Variance Feedback Check My Work 1. The four-varlance method calculates two variances for variable overhead and two variances for fixed overhead. 2. The four-variance method calculates two variances for varlable overhead and two variances for fixed overhead