Chapter 11, Problem 32E

Montoursville Control Company, which manufactures electrical switches, uses a standard-costing system. The standard production overhead costs per switch are based on direct-labor hours and are as follows:

^*Based on capacity of 300,000 direct-labor hours per month.

The following information is available for the month of October.

• Variable-overhead costs were $2,340,000.
• Fixed-overhead costs were $3,750,000.
• 56,000 switches were produced, although 60,000 switches were scheduled to be produced.
• 275,000 direct-labor hours were worked at a total cost of $2,550,000.

Required: Compute the variable-overhead spending and efficiency variances and the fixed-overhead budget and volume variances for October. Indicate whether a variance is favorable or unfavorable where appropriate.