Metropolis Manufacturing Company manufactures a small electric motor that is a replacement part for the more popular gas furnaces. The standard cost card shows the product requirements as follows:

Direct materials'2 lb @$4 per lb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8.00

Direct labor'5 hr@$8 per hr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.00

Factory overhead:

Variable cost'5 hr@$2 per hr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.00

Fixed cost'5 hr@$4 per hr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.00

Total standard cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $78.00

Factory overhead rates are based on normal 100% capacity and the following flexible budgets:

The company produced 3,500 units, using 18,375 direct labor hours and incurring the following overhead costs:
Factory overhead'fixed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $61,950
Factory overhead'variable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $33,710
Required:
1. Calculate the factory overhead, spending, efficiency, budget, and volume variances.
2. Does the net variance represent under- or overapplied factoryoverhead?

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Normal 100% 110% 90% 2,500 Units produced Factory overhead-variable. Factory overhead-fixed 3,500 $25,000 $30,000 $35,000 $60,000 $60,000 60,000 3,000