Question: Overhead variances, missing information. Dvent budgets 18,000 machine-hours for the product of computer chips in August 2009. The budgeted variable overhead rate is $6 per

Overhead variances, missing information. Dvent budgets 18,000 machine-hours for the product of computer chips in August 2009. The budgeted variable overhead rate is $6 per machine-hour. At the end of August, there is a $375 favorable spending variance for variable overhead and a $1,575 unfavorable spending variance for fixed overhead. For the computer chips produced, 14,850 machine-hours are budgeted and 15,000 machine-hours are actually used. Total actual overhead costs are $120,000.

1. Compute efficiency and flexible-budget variances for Dvent’s variable overhead in August 2009. W variable overhead be over- or underallocated by how much?

2. Compute production-volume and flexible-budget variances for Dvent’s fixed overhead in August 2009. Will fixed overhead be over- or underallocated by how much?

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