Wymont Co. produces a single product that requires a large amount of labour time. Overhead cost is applied on the basis of direct labour hours. The company's condensed flexible budget for manufacturing overhead is given below: Overhead costs Variable Overhead costs Cost formula $2 Fixed Overhead costs Total overhead costs Direct labour hours 24,000 30,000 36,000 $48,000 $60,000 $72,000 180,000 180,000 180,000 $228,000 $240,000 $252,000 The company's product requires 4 metres of direct material that has a standard cost of $3 per metre. The product requires 1.5 hours of direct labour time.1 The standard labour rate is $12 per hour. The company had planned to operate at a denominator activity level of 30,000 direct labour hours during the year and to produce 20,000 units of product. Actual activity and costs for the year were as follows: Number of units produced Actual direct labour hours worked Actual variable overhead cost incurred Actual fixed overhead cost incurred Required: 22,000 35,000 $63,000 $181,000 1. Compute the predetermined overhead rate for the year. Break down the overall rate into variable and fixed elements. 2. Determine the variable spending and efficiency variances and the fixed overhead budget and volume variances.