Overhead Variances, Two$-$ And Three$-$Variance Analyses

Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of $122,000$ units requiring $488,000$ direct labor hours. $($Practical capacity is $508,000$ hours.$)$ Annual budgeted overhead costs total $$736,880,$ of which $$541,680$ is fixed overhead. A total of $119,500$ units using $486,000$ direct labor hours were produced during the year. Actual variable overhead costs for the year were $$240,100,$ and actual fixed overhead costs were $$555,900.$Overhead Variances, Two$-$ And Three$-$Variance Analyses

Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual

output of $122,000$ units requiring $488,000$ direct labor hours. $($Practical capacity is $508,000$ hours.$)$ Annual budgeted overhead costs total $$736,880,$ of which

$$541,680$ is fixed overhead. A total of $119,500$ units using $486,000$ direct labor hours were produced during the year. Actual variable overhead costs for the year

were $$240,100,$ and actual fixed overhead costs were $$555,900.$

Required:

Compute overhead variances using a two$-$variance analysis.

Compute overhead variances using a three$-$variance analysis.