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Edney Company employs a standard cost system for product costing. The per-unit standard cost of its product is:

Raw materials	$ 14.00
Direct labor (2 direct labor hours $8.00 per hour)	16.00
Manufacturing overhead (2 direct labor hours $11.40 per hour)	22.80
Total standard cost per unit	$ 52.80

The manufacturing overhead rate is based on a normal capacity level of 600,000 direct labor hours. (Normal capacity is defined as the level of capacity needed to satisfy average customer demand over a period of two to four years. Operationally, this level of capacity would take into consideration sales trends and both seasonal and cyclical factors affecting demand.) The firm has the following annual manufacturing overhead budget:

Variable	$ 3,720,000
Fixed	3,120,000
	$ 6,840,000

Edney incurred $433,750 in direct labor cost for 53,700 direct labor hours to manufacture 26,000 units in November. Other costs incurred in November include $272,000 for fixed manufacturing overhead and $324,000 for variable manufacturing overhead.

Required:

1. Determine each of the following for November. [Note: Indicate whether each variance is favorable (F) or unfavorable (U).]

a. The variable overhead spending variance.

b. The variable overhead efficiency variance.

c. The fixed overhead spending (budget) variance.

d. The fixed overhead production volume variance.

e. The total amount of under- or overapplied manufacturing overhead (i.e., the total manufacturing overhead cost variance for the period).

Is the right?

1. $8,940 F
2. 10,540 U
3. 12,000 U
4. 10,400 F
5. 1,600 Under

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