The condensed form of Nordstrop Company€™s flexible budget for manufacturing overhead follows:

The following information is available for a recent period:
a. The denominator activity of 8,000 machine-hours was chosen to compute the predetermined overhead rate.
b. At the 8,000 standard machine-hours level of activity, the company should produce 3,200 units of product.
c. The company€™s actual operating results were as follows:
Number of units produced . . . . . . . . . . . . . . . . . . . 3,500
Actual machine-hours. . . . . . . . . . . . . . . . . . . . . . . . 8,500
Actual variable overhead costs . . . . . . . . . . . . . . . $9,860
Actual fixed overhead costs . . . . . . . . . . . . . . . . . . $25,100
Required:
1. Compute the predetermined overhead rate and break it down into variable and fixed cost elements.
2. What were the standard hours allowed for the year€™s actual output?
3. Compute the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances.

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Cost Formula (per machine- hour) Machine-Hours 8,000 9,000 10,000 Overhead Costs Variable cost.... Fixed cost.. Š105 $ 9450 $ 8,400 24,800 $33,200 $ 10,500 24,800 24800 Total overhead cost. $34,250 $35,300