Prichard company has developed the following standard cost data based on 60,000 direct labor hours which is 75% of capacity. Fixed overhead is $360,000 and variable overhead is $180,000 at this level of activity.
Per unit
Direct material (3lbs @$2.00/lb) $6.00
Direct labor (0.5hrs @ $8.00/hr) $4.00
Variable overhead (0.5hrs @$3.00/hr) $1.50
Fixed overhead (0.5@$6.00/hr) $3.00
Total standard cost $14.50
During the current period the company operated at 80% of capacity an produced 128,000 units. Actual cost were:
Direct material (380,00 lbs) $779,000
Direct labor (63,000 hrs) $507,150
Fixed overhead $365,000
Variable overhead $220,000
Calculate the variable overhead spending and efficiency variance and the fixed overhead spending and volume variances. Indicate whether each is favorable or unfavorable.