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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Zeta, Inc., produces handwoven rugs. Budgeted production is 5,000 rugs per month and the standard direct labor required to make each rug is 2 hours. All overhead is allocated based on direct labor hours. Zeta's manager is interested in what caused the recent month's $3,000 unfavorable overhead variance. The following information was available to aid in the analysis:
 | Budgeted amounts |  | Actual Results | ||||||
   Production in units |  |  | 5,000 |  |  |  |  | 4,500 |  |
  Total labor hours |  |  | 10,000 |  |  |  |  | 9,000 |  |
  Total variable overhead |  | $ | 60,000 |  |  |  | $ | 55,000 |  |
  Total fixed overhead |  |  | 40,000 |  |  |  |  | 38,000 |  |
 |  |  |  |  |  |  |  |  |  |
       Total overhead |  | $ | 100,000 |  |  |  | $ | 93,000 |  |
 |  |  |  |  |  |  |  |  |  |
 |
a. |
What was the overhead spending variance for the month? |
b. |
What was the overhead volume variance? |
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