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Use the following information of Alfred Industries. Standard manufacturing overhead based on normal monthly volume: Fixed ($303,400 ÷...

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Accounting

Use the following information of Alfred Industries.

Standard manufacturing overhead based on normal monthlyvolume:
Fixed ($303,400 ÷ 20,000 units)$15.17
Variable ($100,000 ÷ 20,000 units)5.00$20.17
Units actually produced in current month18,000units
Actual overhead costs incurred (including $300,000 fixed)$383,800

Compute the overhead spending variance and the volume variance.(Indicate the effect of each variance by selecting"Favorable" or "Unfavorable". Select "None" and enter "0" for noeffect (i.e., zero variance).)

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Overhead Spending Variance = $     20,306 Favorable
Overhead Volume Variance = $     30,340 Unfavorable
Workings:
Overhead Spending Variance
actual overhead - Overhead Budgeted
$                     3,83,800 - $                                   3,93,400 = $     20,306 Favorable
Overhead Budgeted = (18000 X $5) + $303400
= $                                   3,93,400
Overhead Volume Variance
Fixed overhead rate X (Actual units produced - Budgeted production units)
$                           15.17 X (18000 - 20000) = $     30,340 Unfavorable

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