Reference no: EM13876792

ABC Costing Alden Company uses a two-variance analysis for overhead variances. Practical capacity is defined as 32 setups and 32,000 machine hours to manufacture 6,400 units for the year. Selected data for 2010 follow:

Budgeted fixed factory overhead:

Setup	$ 64,000
Other	200,000	$264,000
Total factory overhead incurred Variable factory overhead rate:		$480,000
Per setup		$600
Per machine hour		$5
Total standard machine hours allowed for the units manufactured		30,000 hours
Machine hours actually worked		35,000 hours
Actual total number of setups		28

Required

1. Compute (a) the total overhead spending variance, (b) the overhead efficiency variance, and (c) the total overhead flexible-budget variance for 2010.

2. Assume that the company includes all setup costs as variable factory overhead. The budgeted total fixed overhead, therefore, is $200,000, and the standard variable overhead rate per setup is $2,600. What are the

(a) overhead spending, (b) efficiency, and (c) flexible-budget variances for the year?

3. Assume that the company uses only machine hours as the activity measure to apply both variable and fixed overhead, and that it includes all setup costs as variable factory overhead. What is the (a) overhead spending variance, (b) efficiency variance, and (c) flexible-budget variance for the year?