Solution 1:
Fixed overhead spending variance = Budgeted fixed overhead - Actual fixed overhead
= $585,480 - $555,250 = $30,230 Favorable
Fixed overhead volume variance = Fixed overhead applied - Budgeted fixed overhead
Fixed overhead rate = $585,480 / 492000 = $1.19 per hour
Fixed overhead volume variance = (119500*4*$1.19) - $585,480 = $16,660 Unfavorable
Solution 2:
Standard rate of variable overhead = ($811,800 - $585,480) / 492000 = $0.46 per hour
Actual rate of variable overhead = $260,700 / 490000 = $0.53204 per hour
Variable overhead spending variance = (SR - AR) * AH = ($0.46 - $0.53204)* 490000 = $35,300 Unfavorable
Variable overhead efficiency variance = (SH - AH)*SR = (119500*4 - 490000) * $0.46 = $5,520 Unfavorable
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