Different management levels in Bates Inc. require varying degrees of managerial accounting ...

a.   4-variance analysis:
   Variable overhead rate variance = $35,600 - (7,200 × $5) = $400 favourable

   Variable overhead efficiency variance = $5 × (7,200 - 6,800) = $2,000 unfavourable
   3,400 units × 2 hours

   Fixed overhead rate variance = $26,000 - $20,000 = $6,000 unfavourable

   Fixed overhead production-volume variance = $20,000 - (3,400 × 2 × $3.125) = $1,250 favourable
   $20,000/(3,200 units × 2 hours) = $3.125

b.   3-variance analysis:
   Rate variance = $400 favourable + $6,000 unfavourable = $5,600 unfavourable

   Efficiency variance = $2,000 unfavourable

   Production volume variance = $1,250 favourable

c.   2-variance analysis:
   Flexible budget variance = $400 F + $2,000 U + $6,000 U = $7,600 unfavourable

   Production volume variance = $1,250 favourable

d.   1-variance analysis:
      Flexible
   Actual    Budget   Variances
Fixed overhead    $26,000   $21,250    $4,750 U
Variable overhead    35,600    34,000     1,600 U
Flexible budget variance           $6,350 U

$3.125 × 3,400 × 2 = $21,250
3,400 × 2 × $5 = $34,000