Prado Company Applies Fixed Manufacturing Overhead Costs to Products Based

question 21

Essay

Prado Company applies fixed manufacturing overhead costs to products based on direct labor hours.Information for the month of April appears below.Prado's expected to produce and sell 500 units for the month.
$\begin{array}{lr}\text { Budgeted fixed overhead costs } & \$ 230,000 \\\text { Budgeted direct labor hours } & \div 10,000 \\\text { Standard cost per direct labor hour } & \$23 \\\text { Standard direct labor hours per unit } &20\\\text { Actual production } & 520 \text { units } \\\text { Actual fixed overhead costs }& \$ 202,000\end{array}$
Calculate the fixed overhead spending variance and production volume variance.Clearly label each variance as favorable or unfavorable.

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