Chapter 8, Problem 8.30E

Total overhead, 3-variance analysis. Pampered Pets, Inc., makes embellished accessories primarily for dogs. For 2017, budgeted variable overhead is $70,000 for 10,000 direct labor-hours. Budgeted total overhead is $100,000 at 8,000 direct labor-hours. The standard costs allocated to the production of these accessories included a total overhead rate of 80% of standard direct labor costs.

In May 2017, Pampered Pets incurred total overhead of $133,000 and direct labor costs of $178,125. The direct labor efficiency variance was $7,500 unfavorable. The direct labor flexible-budget variance was $1,875 favorable. The standard labor price was $15 per hour. The production-volume variance was $16,000 favorable.

1. A. Compute the direct labor price variance.
2. B. Compute the denominator level and the spending and efficiency variances for total overhead.
3. C. Describe how individual variable overhead items are controlled from day to day. Also, describe how individual fixed overhead items are controlled.