For March 2010 the Platter Valley factory of Bybee Industries budgeted $90,000 of fixed overhead. Its practical capacity is 2,500 direct labor hours per month (to manufacture 5,000 pairs of boots). The factory spent 2,700 direct labor hours in March 2010 to manufacture 4,800 pairs of boots.

The actual fixed overhead incurred for the month was $92,000.

 

Budgeted fixed factory overhead							$ 90,000
Budgeted direct labor hours							2,500
Budgeted production in pairs of boots							5,000
Actual fixed factory overhead							$ 92,000
Actual direct labor hours							2,700
Actual production in pairs of boots							4,800

Required

1. Compute the spending (budget) variance and the production-volume variance for fixed overhead for March.

2. Compute the fixed overhead flexible-budget variance.

3. Provide appropriate journal entries to record the fixed overhead spending and fixed overhead production volume variances for March.

4. Comment on the factory’s results in March 2010 with regard to fixed overhead costs.