Problem 2 Speed Control Inc. Manufactures carburetors and uses a standard cost system.
The standard factory overhead costs per carburetor are based on machine hours and are as follows:
Variable overhead (3 hours at $4/hour)	$12
Fixed overhead (3 hours at $5/hour**)	15
Total overhead cost per unit	27
**Based on an expectation of 12,000 carburetors per month.
The following additional information is available for the month of December:
10,000 carburetor s were produced although 12,000 had been scheduled for production.
32,000 machine hours were used
The standard direct labor rate is $9 per hour
The standard direct labor time per unit is 4 hours.
Variable overhead costs were $125,000
Fixed overhead costs were $185,000
Required:
a. (6 points) Calculate the spending and efficiency variances for variable overhead.
b. (6 points) Calculate the spending and production volume variances for fixed overhead.
c. (8 points) Prepare journal entries for recording (using the standard cost system from part a):
1) the actual variable overhead costs,
2) the allocation of variable overhead costs to WIP, and
3) the spending and efficiency variances for variable overhead.