Happy Valley Pet Products uses a standard costing system that applies overhead to products based on standard direct labour-hours allowed for actual output of the period. During the recent year, the following Total budgeted fixed overhead cost for the year Actual fixed overhead cost for the year Budgeted standard direct labour-hours Actual direct labour-hours. Standard direct labour-hours allowed for the actual output S 174,600 S 170,600 29,100 30,600 27,100 Required. 1. Compute the fixed portion of the predetermined overhead rate for the year. (Round your answer to 2 decimal places.) 2. Compute the fixed overhead budget and volume variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance). Fixed overhead budget variance Fixed overhead volume variance

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Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance. 

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.