Problem 4 1 Actual costs Fixed Variable Applied costs Analyze underapplied or overapplied overhead. (Objs. 4, 5, 7). Vance Clothing Manufacturers uses the direct labor hours method for applying manufacturing overhead. The overhead application rate for 2006 is $5.49 per hour, based on anticipated fixed costs of $272,250 and anticipated variable costs of $633,600, with an expected volume of 165,000 labor hours. During the year, the company actually operated for 168,630 hours, incurring fixed over- head of $283,400 and variable overhead of $647,426.67. Variance (under/over) 2 Volume Variance Fixed Overhead applied Fixed Overhead budgeted Volume variance U/F Spending variance Actual Overhead for the year Instructions 1. Compute the total underapplied or overapplied overhead for the year. 2. Analyze the total overapplied or underapplied overhead into a volume variance and a spending variance. Budgeted Overhead for hours worked Fixed Variable Total Spending variance U/F Total variance U/F