Pickell Incorporated makes a single product--a cooling coil used in commercial refrigerators. 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. Determine the variable overhead rate variance for the year.
b. Determine the variable overhead efficiency variance for the year.
c. Determine the fixed overhead budget variance for the year.
d. Determine the fixed overhead volume variance for the year.
e. Determine whether overhead was underapplied or overapplied for the year and by how much.

a. Variable component of the predetermined overhead rate (Standard rate) = $96,720/39,000 machine-hours
= $2.48 per machine-hour
Variable overhead rate variance = (Actual hours × Actual rate) − (Actual hours × Standard rate)
= ($53,600) − (33,500 machine-hours × $2.48 per machine-hour)
= ($53,600) − ($83,080)
= $29,480 Favorable
b. Labor efficiency variance = (Actual hours − Standard hours) × Standard rate
= (33,500 machine-hours − 32,500 machine-hours) × $2.48 per machine-hour
= (1,000 machine-hours) × $2.48 per machine-hour
= $2,480 Unfavorable
c. Budget variance = Actual fixed overhead − Budgeted fixed overhead
= $242,270 − $231,270 = $11,000 Unfavorable
d. Fixed component of the predetermined overhead rate = $231,270/39,000 machine-hours
= $5.93 per machine-hour
Volume variance = Budgeted fixed overhead − Fixed overhead applied to work in process
= $231,270 − ($5.93 per machine-hour × 32,500 machine-hours)
= $231,270 − ($192,725)
= $38,545 Unfavorable
e. Predetermined overhead rate = $327,990/39,000 machine-hours = $8.41 per machine-hour