Reference no: EM131719059

Question - Overhead Variances, Four-Variance Analysis

Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 128,000 units requiring 512,000 direct labor hours. (Practical capacity is 532,000 hours.) Annual budgeted overhead costs total $839,680, of which $604,160 is fixed overhead. A total of 119,500 units using 510,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $261,700, and actual fixed overhead costs were $555,950.

Required:

1. Compute the fixed overhead spending and volume variances.

2. Compute the variable overhead spending and efficiency variances. Do not round intermediate calculations.