The formula for computing overhead for the Texas Company for the year is given as $$160,000+$ $$1\mathrm{.}25/$direct labor$-$hour. The company produces a single product that requires $2\mathrm{.}5$ direct labor$-$hours to complete.

Assume that the company chooses $100,000$ direct labor$-$hours as the denominator level of activity, but actually worked $96,000$ hours during the year producing $37,000$ units.

Actual overhead costs for the year are:

Variable costs$ $124,800$Fixed costs$158,800$Total overhead costs$ $283,600$

Required:

$($Be sure to indicate whether the variances are favorable or unfavorable.$)$

Compute the variable overhead price variance and the variable overhead efficiency variance.

Compute the fixed overhead spending $($budget$)$ variance and the production volume variance.