The Standard specifications for an electric motor manufactured by AAA Electric Co. follow: Standard Cost per Unit: Materials (2lb x $5 per lb) $10.00 Labor ($4 hr x $12 per hr) $48.00 Factory

The Standard specifications for an electric motor manufactured by AAA Electric Co. follow:

Standard Cost per Unit:

Materials (2lb x $5 per lb) $10.00

Labor ($4 hr x $12 per hr) $48.00

Factory Overhead (4hr x $3.38* per hr) $13.52

Total Standard Cost $71.52

*1.00 variable + 2.38 fixed = 3.38

Factory overhead rates are based on a normal 70% capacity and use the following flexible budget:

Normal

70% 80% 100%

Motors to be produced 2100 2550 3000

Variable Overhead $8400 $10200 $12000

Fixed Overhead $20000 20000 20000

The actual production was 2500 motors and factory overhead costs totaled $29750.

Calculate the factory overhead variances using the two-variance method.

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