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# Variable overhead efficiency and spending variance

Company B's production budget for the year ended December 31, 2005 was based on 10,000 units. Each unit requires two standard hours of labor for completion. Total overhead was budgeted at \$90,000 for the year, and the fixed overhead rate was estimated to be \$6.00 per unit. Both fixed and variable overhead are assigned to the product on the basis of direct labor hours. The actual data for the year ended December 31, 2005, are:
Actual production in units 9,900
Actual direct labor hours 22,000

Calculate:

The variable overhead efficiency variance for the year
The variable overhead spending variance for the year
The fixed overhead spending variance for the year
The fixed overhead applied to production for the year
The fixed overhead production volume variance for the year
The overhead spending variance for the year using a 3-variance analysis
(is there even enough information to do this?)
The overhead spending variance for the year using a 2-variance analysis
(is there even enough information to do this?)

#### Solution Summary

The solution calculates variable overhead efficiency and spending variance.

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