Shumaker Company manufactures a line of high-top basketball shoes. At the beginning of the year, the following plans for production and costs were revealed:

Pairs of shoes to be produced and sold Standard cost per unit: 55000

Direct materials $15

Direct labour 12

Variable overhead 6

Fixed overhead 3

Total unit cost 36

During the year, a total of 50,000 units were produced and sold. The following actual costs were

incurred:

Direct materials $775,000

Direct labour 590,000

Variable overhead 310,000

Fixed overhead 180,000

There were no beginning or ending inventories of raw materials. In producing the 50,000 units,

63,000 hours were worked, 5 percent more hours than the standard allowed for the actual output.

Overhead costs are applied to production using direct labour hours.

Required:

I. Using a flexible budget, show a performance report comparing expected costs for the actual

production with actual costs.

2. Determine the following:

a. Fixed overhead spending and volume variances.

b. Variable overhead spending and efficiency variances.