Variable Overhead Variances Actual Hours of Input. Actual Hours of Input. Standard Hours Allowed for Output, at the Actual Rate at the Standard Rate at the Standard Rate (AH AR) (AH x SR) (SH X SR) $69,000 17,000 h x 54 - 568,000 18.000 h * 54 = $72.000 Spending Variance, 51,000 (U) Efficiency Variance, 54.000 (F) Total Variance, 53,000 (F) h24 Fig. 7-18 7.14 At the beginning of 19X4, Beal Company adopted the following standards: Direct material (3 pounds @ $2.50 per pound) $ 7.50 Direct labor (5 hours @ $7.50 per hour) 37.50 Factory overhead: Variable ($3.00 per direct labor hour) 15.00 Fixed ($4.00 per direct labor hour) 20.00 Standard cost per unit $80.00 Normal volume per month is 40,000 direct labor hours Beal's January 19X4 budget was based on normal volume. During January, Beal produced 7,800 units, with records indicating the following: Direct material purchased 25,000 pounds @ $2.60 Direct material used 23,100 pounds Direct labor 40,100 hours @ $7.30 Factory overhead $300,000 (a) Prepare a flexible budget for January 1984 production costs, based on actual production of 7,800 units. (b) For the month of January 19X4.compute the following variances, indicating whether each is favorable or unfavorable: 1. Direct materials price variance, based on purchases 2. Direct materials usage variance 3. Direct labor rate variance 4. Direct labor efficiency variance S. Factory overhead spending variance 6. Variable factory overhead efficiency variance 7. Factory overhead volume variance