Perform a three-way breakdown of the total overhead variance

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Three-Variance Analysis Use the following data for Marilyn, Inc.

Actual total cost for direct labor

$86,800

Total direct labor hours worked

14,000

Total standard labor hours for the output in April

15,000

Direct labor rate variance-unfavorable

$2,800

Actual total overhead cost

$32,000

Budgeted fixed overhead cost

$9,000

Practical capacity, in hours

12,000

Total overhead application rate per standard direct labor hour

$2.25

Required: Use a model similar to the one presented in text Exhibit to perform a three-way breakdown of the total overhead variance, as follows:

1. Overhead spending variance.

2. Variable overhead efficiency variance.

3. Production-volume variance

4. Prepare a reconciliation of results from the two-variance and three-variance approaches.

Reference no: EM13876776

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