Nolton-Ragnvald AS uses a standard costing system. It allocates manufacturing overhead (both variable and fixed) to products on the basis of standard direct manufacturing labourhours (DLH). Nolton develops its manufacturing overhead rate from the current annual budget. The manufacturing overhead budget for 2008 is based on budgeted output of 720 000 units requiring 3 600 000 direct manufacturing labour-hours. The company is able to schedule production uniformly throughout the year.

A total of 66 000 output units requiring 315 000 direct labour-hours was produced during May 2008. Manufacturing overhead (MOH) costs incurred for May amounted to NKr 375 000. The actual costs as compared with the annual budget and 1/12 of the annual budget are shown below.

Annual manufacturing overhead budget 2008

Required
Calculate the following amounts for Nolton-Ragnvald for May 2008:
1. Total manufacturing overhead costs allocated.
2. Variable manufacturing overhead spending variance.
3. Fixed manufacturing overhead spending variance.
4. Variable manufacturing overhead efficiency variance.
5. Production-volume variance.
Be sure to identify each variance as favourable (F) or unfavourable (U).

Per output unit Per DLH input unit Monthly MOH budget, May 2008 Actual MOH costs for May 2008 Total amount Variable MOH Indirect mfg labour Supplies NKr 900000 NKr 1.25 1.70 NKr 0.25 0.34 NKr 75000 102000 NKr 75000 111 000 1 224 000 Fixed MOH Supervision Utilities Depreciation 648 000 540000 1 008000 NKr 4 320000 0.90 0.75 1.40 NKr 6.00 0.18 0.15 0.28 NKr 1.20 54000 45 000 84 000 NKr 360000 51 000 54 000 84000 NKr 375 000 Total