Nuevo Company produces a single product. Nuevo employs a standard cost system and uses a flexible budget to predict overhead costs at various levels of activity. For the most recent year, Nuevo used a standard overhead rate equal to $6.25 per direct labor hour. The rate was computed using expected activity. Budgeted overhead costs are $80,000 for 10,000 direct labor hours and $120,000 for 20,000 direct labor hours. During the past year, Nuevo generated the following data:
a. Actual production: 4,000 units
b. Fixed overhead volume variance: $1,750 U
c. Variable overhead efficiency variance: $3,200 F
d. Actual fixed overhead costs: $41,335
e. Actual variable overhead costs: $70,000
1. Determine the fixed overhead spending variance.
2. Determine the variable overhead spending variance.
3. Determine the standard hours allowed per unit of product.
4. Assuming the standard labor rate is $9.50 per hour, compute the direct labor efficiency variance.