Variance analysis using the three-variance method for overhead costs}

Appleton Furniture Company uses a standard cost system in accounting for its production costs. The standard cost of a unit of furniture follows:

{Required:}
Compute the variances for materials, labor, and factory overhead using the threevariance method for overhead costs.

Lumber, 100 ft. @ $150 per 1,000 ft. Direct labor, 4 hrs. @ $10/hr... Factory overhead: Fixed (15% of direct labor)........ Variable (30% of direct labor) Total unit cost The following flexible monthly overhead budget applies: Direct Labor Hours $15.00 40.00 $ 6.00 12.00 18.00 $73.00 Estimated Overhead 5,200 4,800 4,400 4,000 (normal capacity) 3,600 $21,600 20,400 19,200 18,000 16,800 The actual unit costs for the month of December were: Lumber used (110 ft. $120 per 1,000 ft.) Direct labor (4 1/4 hrs. @S10.24/hr.) $13.20 43.52