Problem 11-41 Overhead Calculations; Variance Interpretation (LO 11-5)

Maxwell Company uses a standard cost accounting system and applies production overhead to products on the basis of machine hours. The following information is available for the year just ended:

Standard variable-overhead rate per hour: $6.80

Standard fixed-overhead rate per hour: $12.00

Planned activity during the period: 15,000 machine hours

Actual production: 10,200 finished units

Machine-hour standard: Two completed units per machine hour

Actual variable overhead: $117,000

Actual total overhead: $336,600

Actual machine hours worked: 18,000

Required:

1.Calculate the budgeted fixed overhead for the year.

2.Compute the variable-overhead spending variance.

3.Calculate the company's fixed-overhead volume variance.

4-a.Did Maxwell spend more or less than anticipated for fixed overhead?

4-b.What was the difference in actual and anticipated overhead?

5.Was variable overhead underapplied or overapplied during the year? By how much?