Held Incorporated makes a single product--an electrical motor used in many long-haul trucks. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below:
Required:
a. Compute the variable component of the company's predetermined overhead rate.
b. Compute the fixed component of the company's predetermined overhead rate.
c. Compute the company's predetermined overhead rate.
d. Determine the variable overhead rate variance for the year.
e. Determine the variable overhead efficiency variance for the year.
f. Determine the fixed overhead budget variance for the year.
g. Determine the fixed overhead volume variance for the year.
h. Determine whether overhead was underapplied or overapplied for the year and by how much.

a. Variable component of the predetermined overhead rate = $65,520/45,500 machine-hours
= $1.44 per machine-hour
b. Fixed component of the predetermined overhead rate = $256,165/45,500 machine-hours
= $5.63 per machine-hour
c. Predetermined overhead rate = $321,685/45,500 machine-hours = $7.07 per machine-hour
d. Variable overhead rate variance = (Actual hours × Actual rate) − (Actual hours × Standard rate)
= ($93,528) − (43,300 machine-hours × $1.44 per machine-hour)
= ($93,528) − ($62,352)
= $31,176 Unfavorable
e. Variable overhead efficiency variance = (Actual hours − Standard hours) × Standard rate
= (43,300 machine-hours − 46,800 machine-hours) × $1.44 per machine-hour
= (−3,500 machine-hours) × $1.44 per machine-hour
= $5,040 Favorable
f. Budget variance = Actual fixed overhead − Budgeted fixed overhead
= $240,165 − $256,165 = $16,000 Favorable
g. Volume variance = Budgeted fixed overhead − Fixed overhead applied to work in process
= $256,165 − ($5.63 per machine-hour × 46,800 machine-hours)
= $256,165 − ($263,484)
= $7,319 Favorable
h. Predetermined overhead rate = $321,685/45,500 machine-hours = $7.07 per machine-hour