Vancouver Scholastic Supply Company uses a standard-costing system. The firm estimates that it will operate its manufacturing facilities at 600,000 machine hours for the year. The estimate for total budgeted overhead is $1,500,000. The standard variable-overhead rate is estimated to be $2 per machine hour or $6 per unit. The actual data for the year are presented below.

Actual finished units.....................................................187,500

Actual machine hours...................................................573,000

Actual variable overhead............................................. $1,275,750

Actual fixed overhead................................................. $ 294,000

Required:

1. Compute the following variances. Indicate whether each is favorable or unfavorable, where appropriate.

a. Variable-overhead spending variance.

b. Variable-overhead efficiency variance.

c. Fixed-overhead budget variance.

d. Fixed-overhead volume variance.

2. Prepare journal entries to:

a. Record the incurrence of actual variable overhead and actual fixed overhead.

b. Add variable and fixed overhead to Work-In-Process Inventory.

c. Close underapplied or overapplied overhead into Cost of Goods Sold.

(CMA, adapted)