Sedona Company set the following standard costs for one unit of its product for 2017.

Direct material (30 Ibs. @ $2.20 per Ib.)		$	66.00
Direct labor (20 hrs. @ $4.00 per hr.)			80.00
Factory variable overhead (20 hrs. @ $2.20 per hr.)			44.00
Factory fixed overhead (20 hrs. @ $1.10 per hr.)			22.00
Standard cost		$	212.00

The $3.30 ($2.20 + $1.10) total overhead rate per direct labor hour is based on an expected operating level equal to 65% of the factory's capacity of 52,000 units per month. The following monthly flexible budget information is also available.

		Operating Levels (% of capacity)
Flexible Budget			60%				65%				70%
Budgeted output (units)			31,200				33,800				36,400
Budgeted labor (standard hours)			624,000				676,000				728,000
Budgeted overhead (dollars)
Variable overhead		$	1,372,800			$	1,487,200			$	1,601,600
Fixed overhead			743,600				743,600				743,600
Total overhead		$	2,116,400			$	2,230,800			$	2,345,200

During the current month, the company operated at 60% of capacity, employees worked 591,000 hours, and the following actual overhead costs were incurred.

Variable overhead costs		$	1,326,000
Fixed overhead costs			798,000
Total overhead costs		$	2,124,000

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

Exercise 8-18A Computation and interpretation of overhead spending, efficiency, and volume variances LO P4

1. Compute the variable overhead spending and efficiency variances.

1. Compute the variable overhead spending and efficiency variances Actual Variable OH Cost Flexible Budget Standard Cost (VOH applied) AH SH AVR AH SVR SVR Variable overhead spending variance 0 Unfavorable 0 Favorable Variable overhead efficiency variance Total variable overhead cost variance avorable 2. Compute the fixed overhead spending and volume variances and classify each as favorable or unfavorable Actual Fixed OH cost Fixed OH (Fixed Budgeted) Standard Cost (FOH applied) SH SFR 0 Unfavorable Fixed overhead spending variance Fixed overhead volume variance 0 Unfavorable Total fixed overhead cost variance Unfavorable 3. Compute the controllable variance Controllable Variance Favorable Variable overhead efficiency variance Variable overhead spending variande Unfavorable Fixed overhead spending variance Unfavorable Controllable variance Unfavorable