Total overhead, 3-variance analysis. Ames Air Force Base has a bay that specializes in maintenance for aircraft engines. It uses standard costing and flexible budgets to account for this activity. For 2014, budgeted variable overhead at a level of 8,000 standard monthly direct labor-hours was $64,000; budgeted total overhead at 10,000 standard monthly direct labor-hours was $197,600. The standard cost allocated to repair output included a total overhead rate of 120% of standard direct labor costs. For February, Ames incurred total overhead of $249,000 and direct labor costs of $202,440. The direct labor price variance was $9,640 unfavorable. The direct labor flexible-budget variance was $14,440 unfavorable. The standard labor price was $16 per hour. The production-volume variance was $14,000 favorable. 1. Compute the direct labor efficiency variance. 2. Compute the denominator level and the spending and efficiency variances for total overhead. 3. Describe how individual variable overhead items are controlled from day to day. Also, describe how individual fixed overhead items are controlled.
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