Overhead Variances, Two- And Three-Variance Analyses 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 123,000 units requiring 492,000 direct labor hours. (Practical capacity is 512,000 hours.) Annual budgeted overhead costs total $762,600, of which $551,040 is fixed overhead. A total of 119,000 units using 490,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $241,100, and actual fixed overhead costs were $555,300. Required: 1. Compute overhead variances using a two-variance analysis. Budget Variance -40,580 x Unfavorable Volume Variance Unfavorable 2. Compute overhead variances using a three-variance analysis. Spending Variance Unfavorable Efficiency Variance $ Unfavorable Volume Variance $ Unfavorable