The Milling Department uses standard machine hours to allocate o
The Milling Department uses standard machine hours to allocate overhead to products. Budgeted volume for the year was 36,000 machine hours. A flexible budget is used to set the overhead rate. Fixed overhead is budgeted to be $720,000 and variable overhead is estimated to be $10 per machine hour. 
During the year, two products are milled. The following table summarizes operations. 
Product 1 
Units milled 10,500 
Standard machine per unit 2 
Actual machine hours used 23,000 
Product 2
Units milled 12,000 
Standard machine per unit 1
Actual machine hours used 13,000 
Actual overhead during the year was $1.1 million. 
Calculate all the relevant overhead variances for the department, and write a memo that describes what each one means.
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