Problem 3: OH Cost Variance Analysis (30 points total)

Jake Company, which manufactures electrical switches, uses a standard cost system and carries all inventories at standard. The standard manufacturing overhead costs per switch are based on direct labor hours and are shown below:

Variable overhead (5 hours @ $12 per direct manufacturing labor hour) $ 60

Fixed overhead (5 hours @ $15* per direct manufacturing labor hour) 75

Total overhead per switch $135

*Based on capacity of 200,000 direct manufacturing labor hours per month.

The following information is available for the month of November:

• 46,000 switches were produced although 40,000 switches were scheduled to be produced.
• 225,000 direct manufacturing labor hours were worked at a total cost of $5,625,000.
• Variable manufacturing overhead costs were $2,750,000.
• Fixed manufacturing overhead costs were $3,050,000.
• Find the variable overhead spending and efficiency variances for November.(10 points)

The fixed overhead budget variance for November. (10 points)