The following production information is available for Porter Corporation:

Budgeted production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 units

Actual production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,000 units

Actual variable manufacturing overhead . . . . . . . . . . . . . . . . . . . . . . $175,000

Variable manufacturing overhead applied. . . . . . . . . . . . . . . . . . . . . . . . $0.80 per machine hour

Actual fixed manufacturing overhead. . . . . . . . . . . . . . . . . . . . . . . . . .$88,500

Budgeted fixed manufacturing overhead . . . . . . . . . . . . . . . . . . . . . . $90,000

Actual machine hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220,000 hours

Standard machine hours per unit produced . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 machine hours

Required:

1. Calculate the following variances for Porter Corporation:

a. Variable manufacturing overhead spending variance

b. Variable manufacturing overhead efficiency variance

c. Fixed manufacturing overhead budget variance

d. Volume variance

2. Interpretive Question: Explain how the spending variance and the efficiency variance are used to control overhead costs.

3. Identify cost drivers other than machine hours that might be better measures of spending and efficient use of variable manufacturing overhead costs.

4. Can machine hours be considered a good cost driver for fixed manufacturing overhead costs?