Zeta, Inc., produces handwoven rugs. Budgeted production is 5,000 rugs per month and the standard direct labor required to make each rug is 2 hours. All overhead is allocated based on direct labor hours. Zeta’s manager is interested in what caused the recent month’s $3,000 unfavorable overhead variance. The following information was available to aid in the analysis:

a. What was the overhead spending variance for the month?
b. What was the overhead volume variance?
c. What corrective actions should Zeta’s manager undertake related to the unfavorable overheadvariance?

  • CreatedApril 17, 2014
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