Question: Outdoor Products Inc. produces extreme-weather sleeping bags. The company applies fixed manufacturing overhead costs to products based on direct labor hours. Information for the month

Outdoor Products Inc. produces extreme-weather sleeping bags. The company applies fixed manufacturing overhead costs to products based on direct labor hours. Information for the month of September appears below. Outdoor Products expected to produce and sell 5,000 units for the month.

Budgeted fixed overhead costs Budgeted direct labor hours Standard cost per direct

Required

Calculate the fixed overhead spending variance and production volume variance using the format shown in Exhibit 10.9. Clearly label each variance as favorable or unfavorable.

Exhibit 10.9

Budgeted fixed overhead costs Budgeted direct labor hours Standard cost per direct labor hour Standard direct labor hours per unit Actual production Actual fixed overhead costs $135,000 + 15,000 $ 3 9 5,100 units $128,000

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