Response to the following problem:
Messner Company is planning to produce 280,000 units for the coming year. The company uses direct labor hours to assign overhead to products. Each unit requires 0.9 standard hour of labor for completion. The total variable overhead budgeted was $801,360. The total fixed overhead budgeted for the coming year is $1,386,000. Predetermined overhead rates are calculated using direct labor hours based on expected production.
Actual results for the year are:
Actual production (units) ................291,000
Actual direct labor hours ................259,000
Actual fixed overhead ................... $1,410,000
Actual variable overhead ............... $829,000
Required:
1. Compute the fixed overhead rate.
2. Compute the applied fixed overhead.
3. Compute the fixed overhead spending and volume variances.
4. Compute the applied variable overhead.
5. Compute the variable overhead spending and efficiency variances.