Bazar Company produces one product, a lighter called LIT-lighter. Bazar uses a standard cost system and determines that it should take one hour of direct labor to produce one LIT-lighter. The normal production capacity for this lighter is 100,000 units per year. The total budgeted overhead is $500,000 comprised of $200,000 of variable costs and $300,000 of fixed costs. Bazar applies overhead on the basis of direct labor hours.

During the current year, Bazar produced 85,000 lighters, worked 89,000 direct labor hours, and incurred variable overhead costs of $160,000 and fixed overhead costs of

$300,000.

Requirements 1. Compute the standard variable overhead allocation rate and the standard fixed overhead allocation rate.

2. Compute the overhead allocated to production for Bazaar for the year.

3. Compute the total overhead cost variance.