Wilmington Composites, Inc., developed its overhead application rate from the annual budget. The budget is based on an expected total output of 720,000 units requiring 3,600,000 machine hours. The company is able to schedule production uniformly throughout the year. The cost driver for overhead costs is machine hours.
A total of 66,000 units requiring 315,000 machine hours were produced during March. Actual overhead costs for March amounted to $750,000. The actual costs, as compared to the annual budget and to one-twelfth of the annual budget, are as follows:

Required:
1. Prepare a schedule showing the following amounts for Wilmington Composites, Inc., for March.
a. Applied overhead costs.
b. Variable-overhead spending variance.
c. Fixed-overhead budget variance.
d. Variable-overhead efficiency variance.
e. Fixed-overhead volume variance.
Where appropriate, be sure to indicate whether each variance is favorable or unfavorable.
2. Draw a graph similar to Exhibit 11€“7 to depict the variable-overhead variances.
In Exhibit 11€“7,

3. Why does your graph differ from Exhibit 11€“7, other than the fact that the numbers differ?
(CMA,adapted)

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WILMINGTON COMPOSITES, INC. Annual Budget Total Amount Per Unit Per Machine Monthly Budget Actual Costs for March Variable owerhead: $2,448,000 1,800,000 3.40 2.50 $ 68 .50 $204,000 150,000 $222,000 150,000 Indirect labor Fixed averhead: 1,296,000 1,080,000 2,016,000 $8,640,000 Supervision 1.50 2.80 $12.00 .36 .30 56 $2.40 108,000 90,000 168,000 $720,000 102,000 108,000 168,000 $750,000 Uilities Depreciation Total Rate (Actual) $5.50 (Standard) $5.00 Activity level 6,000 6,300 (process hours) (Standard) (Actual)