Nolton-Ragnvald AS uses a standard costing system. It allocates manufacturing overhead (both variable and fixed) to products on the basis of standard direct manufacturing labour-hours (DLH). Nolton develops its manufacturing overhead rate from the current annual budget. The manufacturing overhead budget for 2018 is based on budgeted output of 720,000 units requiring 3,600,000 direct manufacturing labour-hours. The company is able to schedule production uniformly throughout the year. 

A total of 66,000 output units requiring 315,000 direct labour-hours was produced during May 2018. Manufacturing overhead (MOH) costs incurred for May amounted to NOK 375,000. The actual costs as compared with the annual budget and 1/12 of the annual budget are shown below. 

Annual manufacturing overhead budget 2018 

Required

Calculate the following amounts for Nolton-Ragnvald for May 2018: 

1. Total manufacturing overhead costs allocated. 

2. Variable manufacturing overhead spending variance. 

3. Fixed manufacturing overhead spending variance. 

4. Variable manufacturing overhead efficiency variance. 

5. Production-volume variance. 

Be sure to identify each variance as favourable (F) or unfavourable (U).

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Per Monthly Actual Per DLH мон Мон Total budget, May 2018 input costs for output unit unit May 2018 amount Variable MOH Indirect mfg labour NOK 900 000 NOK 1.25 NOK 0.25 NOK 75 000 NOK 75 000 1 224 000 Supplies 1.70 0.34 102 000 111 000 Fixed MOH 51 000 Supervision Utilities 648 000 0.90 0.18 54 000 540 000 0.75 0.15 45 000 54 000 1 008 000 0.28 NOK 1.20 84 000 84 000 NOK 375 000 Depreciation 1.40 NOK 6.00 Total NOK 4 320 000 NOK 360 000