Prefab Pools Company Variance Analysis for Direct Materials, Direct Labor, and Variable Overhead Prefab Pools Company produces large prefabricated in-ground swimming pools made of a specialized plastic material. The master budget shows the following standards information and indicates the company expected to produce and sell 600 units for the month of April. Direct materials: 500 pounds per unit at $ 7 per pound Direct labor: 46 hours per unit at $12 per hour Variable manufacturing overhead: 46 direct labor hours per unit at $30 per hour Prefab Pools actually produced and sold 580 units for the month. During the month, the company purchased 330,000 pounds of material for $2,277,000, and used 295,800 pounds in production. A total of 25,520 labor hours were worked during the month at a cost of $313,896. Variable overhead costs totaled $790,000 for the month. Fixed Overhead Variance Analysis Prefab Pools Company produces prefabricated in-ground swimming pools and applies fixed manufacturing overhead costs to products based on direct labor hours. Information for the month of April appears below. Prefab Pools expected to produce and sell 600 units for the month. Budgeted fixed overhead costs $966,000 Budgeted direct labor hours 27,600 Standard cost per direct labor hour $ 35 Standard direct labor hours per unit 46 Actual production 580 units Actual fixed overhead costs $910,000 Required

a. Calculate the fixed overhead spending variance and production volume variance. Clearly label each variance as favorable or unfavorable.

b. Company management has asked you to investigate the cause of the fixed overhead spending variance calculated in requirement a. Provide one possible explanation for this variance.