Sutherland Products uses standard costing. The following information about overhead was generated during August: Standard variable overhead rate Standard fixed overhead rate Actual variable overhead costs Actual fixed overhead costs Budgeted fixed overhead costs $2 per machine hour $3 per machine hour $443,200 $698,800 $700,000 Standard machine hours per unit produced 12 Good units produced Actual machine hours Compute the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances using formulas or diagram form. 18,940 228,400 SOLUTION Variable overhead efficiency variance: Variable overhead applied to good units produced Standard rate x standard hours allowed [$2 x (18,940 x 12)] $454,560 Less budgeted variable overhead costs for actual hours Standard rate x actual hours worked ($2 x 228,400) $456,800 Variable overhead efficiency variance $ 2,240 (UNFAVORABLE)