Chapter 8, Problem 22E

(Appendix) Calculating factory overhead: four variances

Atlanta Adhesives Inc. budgets 15,000 direct labor hours for the year. The total overhead budget is expected to amount to $42,000. The standard cost for a unit of the company’s product estimates the variable overhead as follows:

The actual data for the period follow:

Using the four-variance method, calculate the overhead variances. (Hint: First compute the budgeted fixed overhead rate.)