# Sedona Company set the following standard costs for one unit of its product for 2015. Direct material (20 Ibs. @

## Question:

Sedona Company set the following standard costs for one unit of its product for 2015.
Direct material (20 Ibs. @ \$2.50 per Ib.) . . . . . . . . . . . . . . . . . . . . . . . \$ 50
Direct labor (10 hrs. @ \$8.00 per hr.) . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Factory variable overhead (10 hrs. @ \$4.00 per hr.) . . . . . . . . . . . . . . . . 40
Factory fixed overhead (10 hrs. @ \$1.60 per hr.) . . . . . . . . . . . . . . . . . . 16
Standard cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$186
The \$5.60 (\$4.00 + \$1.60) total overhead rate per direct labor hour is based on an expected operating level equal to 75% of the factory's capacity of 50,000 units per month. The following monthly flexible budget information is also available.

During the current month, the company operated at 70% of capacity, employees worked 340,000 hours, and the following actual overhead costs were incurred.
Variable overhead costs . . . . . . . . \$1,375,000
Fixed overhead costs . . . . . . . . . . . . 628,600
Total overhead costs . . . . . . . . . . . \$2,003,600
2. Compute the total variable and total fixed overhead variances.