The Matten Company Has Developed Standard Overhead Costs Based Upon

question 23

Essay

The Matten Company has developed standard overhead costs based upon a capacity of 180,000 direct labor hours:
$\begin{array}{llr} \text { Standard costs per unit: } &\\ \text { Variable portion } & \text {2 hours \( @ \$ 3=\$6 \)}\\ \text { Fixed portion } & \text {2 hours \( @ \$ 5=10 \)}\\&\quad\quad\quad\quad\quad\quad\$16\end{array}$

During April, 85,000 units were scheduled for production; however, only 80,000 units were actually produced. The following data relate to April:
Actual direct labor cost incurred was $644,000 for 165,000 actual hours of work.
Actual overhead incurred totaled $1,378,000; $518,000 variable and $860,000 fixed.
All inventories are carried at standard cost.
Required:
(Be sure to indicate whether the variances are favorable or unfavorable.)
a. Compute the fixed overhead spending (budget) variance.
b. Compute the production volume variance.

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Definitions:

Onset of Diarrhea

The commencement or beginning of frequent and watery bowel movements.

Postoperative Atelectasis

The collapse of lung tissue affecting part or all of one lung, a common complication after surgery.

Bronchodilators

Medications that relax bronchial muscles and widen the airways, easing breathing in respiratory conditions like asthma.

Lung Volumes

Measurements that reflect the different capacities of the lung, including tidal volume, residual volume, and total lung capacity.