Sweet Acacia and Associates is a medium-sized company located near a large metropolitan area in the Prairies. The company manufactures cabinets of mahogany, oak, and other fine woods for use inexpensive homes, restaurants, and hotels. Although some of the work is custom, many of the cabinets are a standard size. One non-custom model is called the Luxury Base Frame. Normal production is 1,000 units per month. Each unit has a direct labour hour standard of 5 hours. Overhead is applied to production based on standard direct labour hours. During the most recent month, only 1,040 units were produced; 4,500 direct labour hours were allowed for standard production, but only 4,000 hours were used. Standard and actual overhead costs were as follows:

		Standard (1,000units)				Actual (1,040units)
Indirect materials			$14,300				$14,600
Indirect labour			51,200				60,700
Manufacturing supervisors, salaries (fixed)			26,800				26,200
Manufacturing office employees, salaries (fixed)			15,500				14,900
Engineering costs (fixed)			32,100				29,800
Computer costs			11,900				11,900
Electricity			3,000				3,000
Manufacturing building depreciation (fixed)			9,500				9,500
Machinery depreciation (fixed)			3,600				3,600
Trucks and forklift depreciation (fixed)			1,800				1,800
Small tools			800				1,700
Insurance (fixed)			600				600
Property taxes (fixed)			400				400
Total			$171,500				$178,700

A)Determine the overhead application rate. (Round answer to 2 decimal places, e.g. 15.25.)

Overhead application rate

$

B)Determine how much overhead was applied to production.

Overhead applied to production

$

C) Calculate the overhead budget variance and the overhead volume variance. (Round intermediate calculation to 2 decimal places, e.g. 15.25 and final answers to the nearest whole dollar, e.g. 5,275.)

Budget overhead variance		$		select an option (Unfavourable. or. Favourable or. Neither favourable nor unfavourable
Overhead volume variance		$		select an option ( Unfavourable or Favourable or Neither favourable nor unfavourable

D) Decide which overhead variances should be investigated.

select an option (Neither variance or. The budget overhead variance or Both variances or The overhead volume variance) : should be investigated.