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At the beginning of the year, Raydom Company had the following standard cost sheet for one of its chemical products:
Direct materials (5 lbs. @ $6.40) ...................$32.00Direct labor (2 hrs. @ $18.00) ...................... 36.00Fixed overhead (2 hrs. @ $4.00) ................... 8.00Variable overhead (2 hrs. @ $1.50) ............... 3.00Standard cost per unit ...............................$79.00
Raydom computes its overhead rates using practical volume, which is 144,000 units. The actual results for the year are as follows:
a. Units produced: 140,000b. Direct labor: 290,000 hours at $9.05c. Fixed overhead: $1,160,000d. Variable overhead: $436,000Required:
1. Compute the variable overhead spending and volume variances.2. Compute the fixed overhead spending and efficiency variances.
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