standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual Oerstman, Inc., uses a output of 123,000 units requiring 492,000 direct labor hours. Practical capacity is 512.000 hours Annual budgeted overhead costs total $752,760, of which $551,040 is fixed overhead. A total of 119,400 units using 490,000 direct labor hours were produced during the year. Actual variable overhead costs for the were $241,200, and actual fixed overhead costs were $556,050. yea Required: 1. Compute overhead variances using a two-variance analysis. 5,01 Budget Variance Unfavorable Volume Variance Unfavorable 2. Compute overhead variances using a three-variance analysis. Spending Variance Efficiency Variance Volume Variance