Variable overhead (5 direct labour hours @$8.00 per hour…………………. $ 40
Fixed overhead (5 direct labour hours@ $12.00 per hour) …………………… 60
Total overhead………………………………………………………… $100
The following information is available for the month of October.
Variable overhead costs were $2,340,000.
Fixed overhead costs were $3,750,000.
56,000 switches were produced, although 60,000 switches were scheduled to be produced.
275,000 direct labour hours were worked at a total cost of $2,550,000.
Required:
Compute the variable overhead spending and efficiency variances and the fixed- overhead budget and volume variances for October. Indicate whether a variance is favourable or unfavourable where appropriate.
