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?

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Budgeted Amounts Actual Results Production in units Total labor hours Total variable overhead Total fixed overhead . 5,000 10,000 60,000 40,000 $100,000 4,500 9,000 $55,000 38,000 $93,000 Total overhead