The Condensed Flexible Budget of the Texas Company for the Year

Essay

The condensed flexible budget of the Texas Company for the year is given as $160,000 + $1.25/direct labor hour.The company produces a single product that requires 2.5 direct labor-hours to complete.Assume that the company chooses 100,000 direct labor-hours as the denominator level of activity,but actually worked 96,000 hours during the year producing 37,000 units.Actual overhead costs for the year are: $$\begin{array} { | l | r | } \hline \text { Variable costs } & \$ 124,800 \\\hline \text { Fixed costs } & \underline { 158,800} \\\hline \text { Total overhead costs } & \underline {\$ 283,600 }\\\hline\end{array}$$
Required:
(Be sure to indicate whether the variances are favorable or unfavorable. )
a.Compute the variable overhead price variance and the variable overhead efficiency variance.b.Compute the fixed overhead spending (budget)variance and the production volume variance.