Zeta, Inc., produces handwoven rugs. Budgeted production is 5,000 rugs per month and the standard di

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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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