Question:

Different management levels in Bates Inc. require varying degrees of cost accounting information. Because of the need to comply with the managers requests, three ways of variances analysis for manufacturing overhead are computed each month. The information for the September overhead expenditures is as follows:

Budgeted output units 6400 units

Budgeted fixed manufacturing overhead $40,000

Budgeted variable manufacturing overhead $10 per direct labor hour

Budgeted direct manufacturing labor hours 4 hours per unit

Fixed manufacturing costs incurred $52,000

Direct manufacturing labor hours used 14,400

Variable manufacturing costs incurred $71,200

Actual units manufactured 6800

Compute a 3-way analysis of variance for the plant managers?

1. Calculate the manufacturing overhead spending variance?
2. Calculate the manufacturing overhead efficiency variance?
3. Calculate the manufacturing overhead production volume variance?