Sedona Company set the following standard costs for one unit of its product for this year.

Direct material (30 pounds @ $2.20 per pound)$ 66.00Direct labor (20 hours @ $4.20 per DLH)84.00Variable overhead (20 hours @ $2.20 per DLH)44.00Fixed overhead (20 hours @ $1.10 per DLH)22.00Standard cost per unit$ 216.00

The $3.30 ($2.20 + $1.10) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 40,800 units, which is 60% of the factorys capacity of 68,000 units per month. The following monthly flexible budget information is available.

Flexible BudgetOperating Levels (% of capacity)55%60%65%Budgeted production (units)37,40040,80044,200Budgeted direct labor (standard hours)748,000816,000884,000Budgeted overhead Variable overhead$ 1,645,600$ 1,795,200$ 1,944,800Fixed overhead897,600897,600897,600Total overhead$ 2,543,200$ 2,692,800$ 2,842,400

During the current month, the company operated at 55% of capacity, direct labor of 728,000 hours were used, and the following actual overhead costs were incurred.

Actual variable overhead$ 1,625,000Actual fixed overhead924,300Actual total overhead$ 2,549,300

Exercise 21-28A (Algo) Detailed overhead variances LO P5

AH = Actual Hours SH = Standard Hours AVR = Actual Variable Rate SVR = Standard Variable Rate

1. Compute the variable overhead spending and efficiency variances. 2. Compute the fixed overhead spending and volume variances. 3. Compute the controllable variance.