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Jackson Corporation uses a standard cost system, concerned manufacturing overhead on the basis of machine hours. The company's overhead standards per unit are given below.
Variable overhead: 4 hours at $9 per hour.
Fixed overhead: 4 hours at $6* per hour.
Based on planned monthly activity of 120,000 machine hours.
Real data for May were:
Number of units produced: 29,000.
Number of machine hours worked: 125,000.
Variable overhead costs incurred: $1,085,000.
Fixed overhead costs incurred: $755,000.
Required:
A. Determine the spending and efficiency variances for variable overhead.
B. Determine the budget and volume variances for fixed overhead.
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