The variable portion of Whaley Company€™s flexible budget for manufacturing overhead is as follows:

During a recent period, the company recorded 16,000 machine-hours of activity. The variable overhead costs incurred were as follows:
Utilities . . . . . . . . . . . . $20,000
Supplies . . . . . . . . . . . $4,700
Maintenance . . . . . . . $35,100
Rework . . . . . . . . . . . $12,300

The budgeted activity for the period had been 18,000 machine-hours.

Required:
1. Prepare a variable overhead performance report for the period. Indicate whether variances are favorable (F) or unfavorable (U). Show only a spending variance on your report.
2. Discuss the significance of the variances. Might some variances be the result of others?Explain.

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Formula (per machine- hour) Machine-Hours Overhead Costs 10,000 16,000 24,000 Utilities $1.20 0.30 2.40 0.60 $12,000 $21,600 28,800 7.200 24,000 43,200 57,600 14,400 3,000 5,400 Maintenance Rework Total variable overhead cost 6,000 10,800 . . $4.50 $45,000 $81,000 $108,000