Standard machine hours budgeted by Trace Company for December production were 2,500. Factory overhead at that level was budgeted at $15,000, of which $5,000 is variable. Actual machine hours for the month were 2,700, but the number of standard machine hours allowed for actual December production is 2,400. Actual factory overhead incurred during the month was $16,500.
Required:
Compute the overall factory overhead variance analyze it for spending, idle capacity, and efficiency variances, using the alternative three-variance method presented in the appendix to this chapter. Indicate whether the variances are favorable or unfavorable.