Calculating the Fixed Overhead Spending and Volume Variances
Standish Company manufactures consumer products and provided the following information for the month of February:
Units produced................... 131,000
Standard direct labor hours per unit............ 0.20
Standard fixed overhead rate (per direct labor hour) ..... $2.50
Budgeted fixed overhead................$65,000
Actual fixed overhead costs...............$68,300
Actual hours worked................. 26,350
Required:
1. Calculate the fixed overhead spending variance using the formula approach.
2. Calculate the volume variance using the formula approach.
3. Calculate the fixed overhead spending variance and volume variance using the three-
pronged graphical approach.
4. What if 129,600 units had actually been produced in February? What impact would that have had on the fixed overhead spending variance? On the volume variance? Cornerstone