standard costing system and allocates fixed and variable overhead based on direct labor hours. The Ames Widget Co. makes and sells eight types of widgets. The company unes a For fixed overhead, the company uses practical capacity in the denominator of the overhead rate Practical capacity is 20,000 direct labor hours per year. Following is information about one of the eight types of widgets (the steel widget), and information for the entire factory, for 2013. Badget Actual Production levels: Steel widgets all types of widgets (including steel) Direct labor for steel widgets: wage rate hours per widget $10 per hr. 2 hours 1,000 5,000 Required: A) Calculate the spending variance for fixed overhead for the factory. 10,000 Direct labor hours for all types of widgets (including steel): Total variable overhead (for the entire factory) Total fixed overhead (for the entire factory) $15,000 $10,000 *These amounts apply not only to steel widgets, but to all types of widgets. B) Calculate the volume variance for fixed overhead for the factory. 1,200 4,000 $12 per hr. 1.5 hours 16,000 $18,000 $9,500 C) Recalculate the volume variance for fixed overhead assuming the company uses budgeted production in the denominator of the fixed overhead rate.