Reference no: EM132603206

Eastern Company uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of standard direct labor-hours (DLHs). The denominator activity level is 60,000 direct labor-hours, or 300,000 units.

A standard cost card for the company's product follows:

                            Standard quantity or hours                 Standard price or rate                Standard cost

Direct materials              0.25 kilogram                                $16 per kilogram                     $4

Direct labor                     0.20 DLH                                        $10 per DLH                         2

Variable overhead              0.20 DLH                                        $5 per DLH                          1

Fixed overhead                     0.20 DLH                                     $10 per DLH                         2

Total standard cost                                                                                                        $9

Actual data for the year follow:

Units produced and sold 330,000

Actual direct labor-hours worked 64,800

Actual variable manufacturing overhead cost $327,240

Actual fixed manufacturing overhead cost $612,000

Required:

Question a. Compute the variable manufacturing overhead spending and efficiency variances.

Question b. Compute the fixed manufacturing overhead budget and volume variances.