Three-Variance Analysis Use the following data for Marilyn, Inc.
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Actual total cost for direct labor
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$86,800
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Total direct labor hours worked
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14,000
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Total standard labor hours for the output in April
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15,000
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Direct labor rate variance-unfavorable
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$2,800
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Actual total overhead cost
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$32,000
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Budgeted fixed overhead cost
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$9,000
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Practical capacity, in hours
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12,000
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Total overhead application rate per standard direct labor hour
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$2.25
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Required: Use a model similar to the one presented in text Exhibit to perform a three-way breakdown of the total overhead variance, as follows:
1. Overhead spending variance.
2. Variable overhead efficiency variance.
3. Production-volume variance
4. Prepare a reconciliation of results from the two-variance and three-variance approaches.