The Savannah Machine Tool Company has an automated production process, and production activity is quantified in terms of machine hours. It uses a standard-costing system. The annual static budget for 20x6 called for 6,000 units to be produced, requiring 30,000 machine hours. The standard-overhead rate for the year was computed using this planned level of production. The 20x6 manufacturing cost report are attached.
The company produced a total of 6,200 units during 20x6, requiring 32,000 machine hours. The preceding manufacturing cost report compares the company's actual cost for the year with the static budget and the flexible budget for two different activity levels.
Compute the following amounts. For variances, indicate favorable or unfavorable where appropriate. Answers should be rounded to two decimal places when necessary.
a. The standard fixed-overhead rate per machine hour used for product costing.
b. The variable-overhead spending variance. (Assume that management has determined that the actual fixed overhead cost in 20x6 amounted to $324,000.)
c. The variable-overhead efficiency variance.
d. The fixed-overhead budget variance. Fixed OH variance = 0
e. The fixed-overhead volume variance. [Make the same assumption as in requirement (b).