Kojima Company is planning to produce 600,000 power drills for the coming year. The com- pany uses direct labour hours to assign overhead to products. Each drill requires 0.75 standard hour of labour for completion. The total budgeted overhead was $1,777,500. The total fixed overhead budgeted for the coming year is $832,500. Predetermined overhead rates are calculated using expected production, measured in direct labour hours. Actual results for the year are:
Actual production (units) ............................ 594,000
Actual direct labour hours ........................... 446,000
Actual variable overhead ............................ $928,000
Actual fixed overhead................................ $835,000
Required:
1. Compute the applied fixed overhead.
2. Compute the fixed overhead spending and volume variances.
3. Compute the applied variable overhead.
4. Compute the variable overhead spending and efficiency variances.