Reference no: EM132846149

Question - Orion Inc. uses a standard costing system. Overhead costs are applied based on direct labour hours. Budgeted data for January are as follows:

Static Budget

Units Produced 126,000

Direct Labour Hours 56,700

Total Budgeted Manufacturing Overhead Costs $130,410

Predetermined Fixed Manufacturing Overhead Rate $2.00 per DLH

Actual data for January are as follows:

Actual

Units Produced 115,000

Direct Labour Hours 55,000

Variable Overhead Costs $15,250

Fixed Overhead Costs $115,200

Required -

1. What is the rate variance for variable overhead.

2. What is the efficiency variance for variable overhead?

3. What is the Rate variance for fixed overhead?

4. What is the Production volume variance for fixed overhead?

5. Using your answers to questions 3 and 4 above:

a. explain the rate and production volume variances (descriptive analytics).

b. explain why these variances may have occurred (diagnostic analytics).