Reference no: EM133004827

Standard direct labor hours budgeted for May production were 5,000 with factory overhead at that level budgeted at 25,000, of which 15,000 is variable. Actual labor hours for the month were 4,800; however, the number of standard labor hours allowed for actual May production is 5,200. Actual factory overhead incurred during the month was 25,600.

Required:

Problem 1: Compute the overall factory overhead variance and analyze it using the three-variance method (the spending variance, the variable efficiency variance and the volume variance). Indicate whether the variances are favorable or unfavorable.