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Overhead variances: manufacturer Zapp Ltd is a manufacturer of electrical switches, and uses a standard costing system. The standard manufacturing overhead costs per switch are

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Overhead variances: manufacturer Zapp Ltd is a manufacturer of electrical switches, and uses a standard costing system. The standard manufacturing overhead costs per switch are based on direct labour hours and are as follows: $180 Variable overhead (5 hours @ $36 per hour) Fixed overhead (5 hours @ $54 per hour)* Total overhead 270 $450 * Based on capacity of 300 000 direct labour hours per month. The following information is available for October: 56 000 switches were produced, although 60 000 switches were budgeted. 275 000 direct labour hours were worked at a total cost of $11 475 000. Variable overhead costs were $10 530 000. Fixed overhead costs were $16 875 000. Required: Calculate the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances for October. Indicate whether each variance is favourable or unfavourable

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